Pathways to Raising Capital: Brokers, Finders and Solicitors
Capital raising is central to the development of any fund but what channels can be used to access retail investors? Many companies have turned to “finders” who engage in limited solicitation activities. Last year the SEC proposed a rule to create two classes of “finders” that would be exempt from registering as a broker-dealer or as an associated person in circumstances when they help private companies raise money.
This member update answered your capital-raising questions:
- What is the future of the SEC’s “finder’s proposal,” and what alternative pathways exist?
- How does the SEC interpret the definition of “broker” and the meaning of “finder” today?
- How do registered investment advisers use solicitors?
- What benefits come from raising capital through registered broker-dealers?
Darryl SteinhausePartner, DLA Piper LLP
Darryl Steinhause is a partner in DLA Piper’s Real Estate Capital Markets group.
Mr. Steinhause is an integral component of the real estate capital markets practice at DLA Piper. He is familiar with industry best practices and is well versed in the structuring and formation of a wide variety of real estate private equity funds, including those adopting a private REIT structure and the newly created Opportunity Zone Funds. A significant aspect of this representation involves the formation and structuring of sponsor ownership vehicles in a tax-efficient manner in order to maximize after-tax incentive payments to sponsors, their owners, and their employees.
With more than 35 years of experience in highly technical securities and tax transactions, Mr. Steinhause has structured securities offerings for a wide variety of significant clients across the country, acting as lead counsel on over 10 billion dollars of fund, debt, tenant in common (TIC), Delaware statutory trust (DST), real estate investment trust (REIT), Opportunity Zone Funds and other offerings. He has represented both sponsors and institutional investors in a variety of deal structures, including publicly registered transactions, private placements and institutional funds. His experience also includes structuring lending transactions and loan workouts for borrowers particularly involving TICs, REITs and DSTs.
Kristin Rice-GonzalezPartner, Baker McKenzie LLP
Kristin Rice-Gonzalez is a partner in the Chicago office and is experienced in fund review and formation, mergers and acquisitions, investment adviser compliance and general corporate law, with an emphasis on real estate, secondary transactions and fund-of-funds. Kristin focuses her practice on alternative investment fund matters, advising clients on the structuring and formation of, and investment in, international and domestic private investment funds, including private equity funds, and fund-of-funds. She also advises clients in connection with their investment activities and legal issues, including issues concerning FINRA regulations, the Investment Advisers Act of 1940 and the Investment Company Act of 1940. Ms. Rice-Gonzalez has represented well-known investors in international and domestic private funds and fund-of-funds. She has also represented domestic and foreign broker dealers and investment advisers in filings before the SEC and FINRA.
Mark QuinnDirector of Regulatory Affairs, Cetera Financial Group
Mark Quinn is the Director of Regulatory Affairs for Cetera Financial Group, the corporate parent of a group of broker-dealers and Registered Investment Advisors with more than 8,000 financial advisers located across the United States. In that role, he manages a team of professionals handling interactions with agencies including the SEC, FINRA, U.S. Department of Labor, and state regulatory authorities. He also manages advocacy with respect to regulatory and legislative policy on behalf of Cetera.
Prior to joining Cetera, Mr. Quinn was the Chief Risk Officer of First Allied Securities, Inc., and prior to that, General Counsel of Royal Alliance Associates. In those roles and in private law practice, he has focused on representation of broker-dealers, investment advisers, and registered representatives in arbitration, litigation, and regulatory matters. He is a past Chairman of the Compliance Council of the Financial Services Institute and the Retirement Plans and Tax Regulatory Committee of the Insured Retirement Institute, and a current member of the District Committee for FINRA District No. 2. Mr. Quinn holds a B.S. in Finance from Arizona State University and M.B.A. and J.D. degrees from the University of Denver. He is a member of the Colorado, New York, and Florida bars.
Tom SelmanFounder, Scopus Financial Group
Former Executive Vice President for Regulatory Policy and Legal Compliance Officer, FINRA.