Capital Acquisition Brokers Rules Are Final

On October 17, 2016, the SEC approved the FINRA Capital Acquisition Brokers (“CAB”) rule set. As I reported a few months ago, these rules are intended for a limited group of entities that advise companies and private equity firms on capital raises and corporate transactions and act as placement agents for companies and private funds for capital raises from institutional investors.

While still requiring registration with the SEC,  FINRA and exams for associated persons. The rules that must be complied with have been narrowed. The rules as approved by the SEC are basically the same as those present to them by FINRA.

The effective date for the rules dealing with registration and qualification exams is January 3, 2017, which allows firms to start the registration process in order to be able to become active on the effective date of the remaining rules which is April 14, 2017.

An important fact is that existing broker-dealers that are presently only performing the activities of a CAB may also change their status from a fully registered broker-dealer to a CAB.

One issue that still has to be worked through is how the states are going to treat CABs.

I know that many of you are interested in this new category of registration. Feel free to contact me with any questions.


© 2016 Sharon M. Davison


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