IPOers applies for U.S. FINRA Capital Acquisition Broker License

Today, IPOers mandated Reed Smith LLP to file a Capital Acquisition Broker License application with U.S. FINRA.

Capital Acquisition Brokers (CABs) are firms that engage in a limited range of activities, including:

  • 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.

In 2016 The Securities and Exchange Commission (“SEC”) approved FINRA’s capital acquisition broker rules. These regulations apply to broker-dealers who choose to be governed by the capital acquisition rule set (also known as the “CAB Rules”), which provides a more streamlined, less complex alternative to FINRA’s general rulebook. These broker-dealers are known as “capital acquisition brokers” and have been granted membership in FINRA.

A broker-dealer that restricts its activity to a small number of authorized activities is known as a capital acquisition broker. Advice on mergers and acquisitions, private placements, and financial and strategic options are a few of these tasks. A capital acquisition broker may, under certain restrictions, operate as a placement agent or finder or execute securities transactions in connection with the transfer of ownership and control of a privately owned business.

What Does a Capital Acquisition Broker Do?

As previously mentioned, a capital acquisition broker is required to limit its practice to specific authorized activities. These activities can be broadly divided into two groups. The first involves giving corporations and issuers guidance. The second is carrying out securities transactions in connection with a change in the ownership and management of a privately owned business or, in some circumstances, acting as a placement agent or finder.

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