By Joe Edmondson (August 31, 2018, 1:07 PM EDT) -- One of the hallmarks of the modern American entrepreneurial economy is the relative ease with which new businesses can be formed and raise capital. More than a decade ago, a study by a task force empaneled by the American Bar Association's Business Law Section reported that there was an informal and unstructured confluence of practices that put investors together with companies in need of capital, which it characterized as the "vast grey market of securities brokerage."[1] While the statutory requirement for registration as a broker-dealer was well-known — Section 15(a)(1) of the Securities Exchange Act of 1934[2] — there had been less than vigorous enforcement of what was seen by some as a mere technical provision. And understandably so; the U.S. Securities and Exchange Commission was seen as lacking the bandwidth and resources to surveil for compliance among the thousands of private securities offerings each year. Typically, the fact that a finder or other solicitor of investors was unregistered would be discovered as part of the investigation of the transaction for some other reason, perhaps due to a complaint by the investor for fraud or unsuitability. Often the securities themselves were unregistered and not exempt from registration, leading to a violation of Section 5(a) and (c) of the Securities Act of 1933,[3] further compounding the problem. Indeed, if the securities are unregistered, it may be because someone failed to recognize that the instruments meet the definition of a security, and as such, a salesperson may not appreciate the need to comply with Section 15(a)(1). The two go hand in hand....