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CALIFORNIA CORPORATE & SECURITIES LAW

California Finders Exemption Has Yet To Catch On

Last October, Governor Brown signed AB 667 (Wagner) into law.  The bill, which was thefor “finders” product of the efforts of the Corporations Committee of the Business Law Section of the California State Bar, created a statutory “finders” exemption from California’s securities broker-dealer registration requirement.  It is important to recognize that the bill defines “finder” with particularity and not everyone who thinks she is a finder will meet the definition.  For example, the bill includes a list of eight “thou shalt nots” that would disqualify a would-be finder from meeting the statutory definition.  A finder must also obtain and retain the informed, written consent of each person introduced or referred by the finder to an issuer.

The exemption is also conditioned on filing of an initial and annual notices with the Commissioner of Business Oversight and the payment of a fee.  I understand that to date, only one notice has been filed.  It’s premature to call the new exemption a bust.  One possible impediment to use of the exemption may be the lack of a corresponding federal exemption.

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