Key takeaways

• On August 18, 2016, the Securities and Exchange Commission approved new Financial Industry Regulatory Authority (“FINRA”) rules governing registration and regulation of “capital acquisition brokers” (“CABs”).
• A broker-dealer may register as a CAB and become subject to a more streamlined rule book, if it limits the scope of its business to certain activities (e.g., private placements; certain M&A activities).
• CABs are not subject to FINRA’s prohibition on the use of projections or predictions of investment performance contained in FINRA Rule 2210(d)(1)(F).
• CABs may only solicit investors for private funds that rely on Section (3)(c)(7) and may not act as a “chaperone” for foreign broker-dealers under SEC Rule 15a-6.