Only about 10% of Regulation D offerings report using a financial intermediary, according to FINRA economists. Compared with registered broker-dealers, finders are more likely to appear in smaller deals, one-time issuers' deals, and deals sold to non-accredited investors. Issuers can confirm an intermediary's registration on FINRA BrokerCheck before engaging them.
Key takeaways
- About 10% of Regulation D offerings identify an intermediary (FINRA economists, 2013–2022 data).
- Broker-dealers skew toward larger deals sold to accredited investors; finders toward smaller, one-time, and non-accredited deals.
- FINRA flags private placements' illiquidity and limited information as investor risks.
- Check BrokerCheck before you sign an engagement letter.
How often intermediaries are used
A study by economists in FINRA's Office of the Chief Economist, covering Form D filings from 2013 to 2022, found that only about 10% of Regulation D offerings identify the participation of a financial intermediary [1]. Broker-dealer involvement depends mostly on industry: energy and real estate issuers are most likely to use one, technology issuers and venture funds least likely [1].
Finders and broker-dealers differ
Controlling for industry, the same study found broker-dealers tend to participate in larger deals, deals sold to accredited investors, and deals with older, repeat, and public issuers. Finders, by contrast, are more likely to participate in smaller deals, deals with one-time issuers, and deals sold to non-accredited investors [1]. The authors note their views are their own rather than FINRA's [1].
Why registration matters
Registered broker-dealers are subject to SEC and FINRA oversight, including conduct and supervision rules for private placement activity. FINRA has reminded member firms that private offerings can be illiquid and often lack the comprehensive information, operating history, and audited financials found in public offerings — risks that diligence by the intermediary is meant to address [2].
The SEC points issuers to FINRA's BrokerCheck and state securities regulators to confirm whether a firm or individual is registered [3], and FINRA notes that BrokerCheck can also show whether a professional is registered with the SEC [4].
A practical checklist
Before engaging anyone to introduce investors for compensation: confirm the firm and the individuals on BrokerCheck; read the engagement letter's fee and tail provisions; ask how investors are qualified and verified; and ask what diligence the intermediary performs on your offering before showing it to investors.
Frequently asked questions
- What is a finder in a private placement?
- An individual or firm, not registered as a broker-dealer, who introduces investors to an issuer. FINRA economists found finders are more common in smaller deals, one-time issuers' deals, and deals sold to non-accredited investors.
- How do I check whether someone is a registered broker?
- Search the firm and individual on FINRA BrokerCheck (brokercheck.finra.org), and check with your state securities regulator.
- Is Baird Augustine a registered broker-dealer?
- Securities are offered through Umergence LLC, Member FINRA/SIPC.
Sources
- [1]FINRA Office of the Chief Economist, “The Roles of Broker-Dealers in Regulation D Offerings, 2013–2022 (Li, Makaew, and Walsh),” January 24, 2025.
- [2]FINRA, “Regulatory Notice 23-08: FINRA Reminds Members of Their Obligations When Selling Private Placements,” May 9, 2023.
- [3]U.S. Securities and Exchange Commission, “Broker-Dealers — Capital Raising Building Blocks,” Accessed November 2026.
- [4]FINRA, “Check Registration: Sellers and Investments,” Accessed November 2026.
How Baird Augustine helps
This article is for informational purposes only and is not legal, tax, or investment advice, or an offer to sell or a solicitation of an offer to buy any security. Regulatory proposals described here may change before adoption. Securities offered through Umergence LLC, Member FINRA/SIPC.
