SEC's Pay-To-Play Universe Continues To Expand

By Zachary Parks (October 5, 2017, 11:31 AM EDT) -- Over the past 18 months, the list of those covered by the U.S. Securities and Exchange Commission's pay-to-play restrictions has steadily expanded. And if a newly proposed rule is adopted, these pay-to-play restrictions will now cover a new category: the recently created class of broker-dealers called capital acquisition brokers. CABs are brokers whose activities are generally limited to advising companies and private equity funds on certain types of securities offerings, mergers and acquisitions, and capital raising. The activities of CABs are more limited than those engaged in by a traditional broker-dealer — CABs may not carry or maintain customer accounts, handle customers' funds or securities, accept customers' trading orders, or engage in proprietary trading or market-making. The CAB rules are designed to facilitate activities by intermediaries in smaller transactions that would not typically warrant the participation of a fully licensed broker-dealer....

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