The Securities and Exchange Commission is said to be developing rules to allow so-called "finders" of capital to register with the commission.

Gerald Laporte, chief of the SEC's Office of Small Business Policy, confirmed that such a rule was in the works during a panel discussion at the American Bar Association's spring meeting, according to two other participants in the panel discussion.

When asked for further details, Laporte referred PIPEWire to Kristina Fausti, an attorney with the SEC's Division of Trading and Markets, which is drafting the rule. Fausti had not responded to requests for comment by the time of this wire.

Finders are individuals who aren't registered broker-dealers, but act as intermediaries between sources of capital and companies in need of money. The SEC currently allows finders to make introductions between companies and prospective investors. But if finders get involved in structuring deals or providing additional information, they are considered to be in violation of registration requirements.

Allowing finders to register, through a less rigorous process than is required of broker-dealers, could make it easier for smaller companies to raise capital, according to Greg Yadley, an attorney in the Tampa, Fla., office of Shumaker Loop & Kendrick and co-chair of the ABA task force on private placement brokers. For many smaller companies, it's not feasible to hire a registered broker-dealer for financing advice, he said.

Yadley said he hopes to see a proposal from the SEC by the end of this quarter.

The issue of finder registration is currently a high priority at the SEC Division of Trading & Markets, according to David Feldman, of law firm Feldman, Weinstein & Smith, which represents numerous investors in private placements.

Registering finders could help bring transparency to an area where there is potential for abuse, while honest finders could find the new rule helpful, Feldman said.

"I think the more legitimate they are, the more they like it," said Feldman. "Even though some prefer to stay in the shadows."