Bell Nunnally Partner John F. Guild authored the Dallas Bar Association (DBA) Headnotes article “Common Failures to Register Under the Exchange Act.” In the piece, Guild details how counsel advising businesses may unknowingly become “accidental securities brokers,” through their role in transactions, inadvertently triggering required registrations under federal or state securities law, absent an exemption. He notes, “The participation of an unregistered broker can lead to penalties that include the rescission of the issuance of any securities in the transaction.”

“A variety of individuals and entities involved in business transactions commonly fail to register as brokers, even though their activities could require it. These persons include finders, business brokers, real estate syndicators, and investment advisors,” notes Guild.

Guild then breaks down the function in transactions and potential risks for finders, business brokers, real estate syndicators and investment advisors. He concludes by noting, “Counsel should understand the role of anyone involved in the transaction and should inquire about their compensation. If a transaction involves the sale of securities and a participant is receiving income based on the investment itself, consider whether that person should be registered as a broker.”

To read the full article, please click here (page eight).