Pay-to-Play: Capital Acquisition Brokers

Earlier this year, FINRA began accepting applications for firms wishing to register as Capital Acquisition Brokers.Ā  A Capital Acquisition Broker (ā€œCABā€) is a firm that engages in a limited range of activities.Ā  Such activities include advising companies and private equity funds on capital raising and corporate restructuring, and acting as placement agents for sales of unregistered securities to institutional investors under limited conditions. CABs cannot carry or maintain customer accounts, handle customersā€™ funds or securities, accept customersā€™ trading orders, or engage in proprietary trading or market-making. Ā Firms that elect CAB status are governed under different regulatory rules so that they can avoid the more stringent requirements applicable to full-service broker-dealers. Read More…

SEC Approves Rule Set for Capital Acquisition Brokers

The SEC recently approved FINRAā€™s proposed rule change to adopt a new Rule set for firms that meet the definition of “capital acquisition brokers” and that elect to be governed under this rule set (collectively, the ā€˜ā€˜CAB rulesā€™ā€™).

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