FINRA Capital Acquisition Broker Rules

Updated on: Jul 21, 2025

Latest Event


  • Jul. 2025 FINRA Extension
  • On Jul. 17, 2025, FINRA extended time for SEC to take action until Sep. 12, 2025.

On Jun. 4, FINRA proposed rule changes on capital acquisition broker.

  • FINRA proposed rule change to amend capital acquisition broker rules (CAB Rules).
  • Aims to extend pool of permissible investors for newly-issued unregistered securities.
  • Allow to act as placement agents/finders for secondary transactions of unregistered securities in some cases; associates participate in private securities transactions (PST).
  • Follows FINRA 2020 Notice 10-04 on capital acquisition brokers (CABS), see #71356.
  • Proposed Amendments
  • New FINRA CAB Rule 016(i)(8), expand permissible investors for sales of newly-issued unregistered securities to include eligible employees (under institutional investor).
  • Proposed eligible employee includes knowledgeable employees for private fund issuers, specified officers, directors, and employees of issuers other than private funds.
  • Under proposed CAB Rule 016(c)(1)(H), allow capital acquisition broker to act as placement agents, finders for secondary transactions of unregistered securities.
  • In limited circumstance where seller and purchaser of such unregistered securities are institutional investors and sale qualifies for exemption from registration under SRT.
  • Permit CAB associated persons participate in private securities transactions (PSTs), same requirements for associated persons of non-CAB B/D who participate in PSTs.
  • FINRA CAB Rule 328 prohibition on PSTs, (FINRA Rule 3280(e)), creates logistical and other business-related difficulties, for firms with separate affiliates effect transactions
  • Consultation
  • Comments must be sent within 21 days from pending publication in federal register.
  • Jun. 10, 2025 SEC Proposal
  • On Jun. 10, 2025, SEC issued notice of filing of proposal, 21-day comment period.
  • Jun. 16, 2025 SEC Fed Reg Proposal
  • On Jun. 16, 2025, SEC published proposal in the federal register, comments Jul. 7.
  • Jul. 2025 FINRA Extension
  • On Jul. 17, 2025, FINRA extended time for SEC to take action until Sep. 12, 2025.
Regulators
FINRA
Entity Types
B/D; IA; IB
Reference
FINRA-2025-005, 7/17/2025; 90 FR 25396, 6/16/2025; SEC RF 34-103216, 6/10/2025; RF FINRA-2025-005, 6/4/2025; CAB Rules; Citation: *FINRA CAB Rule* 016, 328; FINRA Rule 3280;
Functions
Advertising; Compliance; Legal; Operations; Registration/Licensing; Technology; Underwriting
Countries
United States of America
Category
State
N/A
Products
Fund Mgt; Issuance/IPO; Private Placements; Securities; Wealth Mgt
Rule Type
Proposed
Regions
Am
Rule Date
Jun 4, 2025
Effective Date
Sep 12, 2025
Rule ID
257424
Linked to
N/A
Reg. Last Update
Jul 17, 2025
Report Section
US Investment