The role of the Financial Industry Regulatory Authority (FINRA) regarding payments to unlicensed persons for securities-related and capital-raising activities has expanded. This post gives an overview of the FINRA Rule 2040 (approved by the SEC on Dec. 30, 2014) which governs when and how registered broker-dealers can provide compensation to unregistered persons. Approval of Rule 2040 signals the SEC’s continuing interest regarding concerns about unlicensed persons fulfilling any but the most limited functions, and the increased impact on international capital-raising functions across borders.
