S.D. Admin. R. 20:08:03:17

Current through Register Vol. 51, page 67, December 16, 2024

Section 20:08:03:17 - Finders

(1) The term, agent, as defined in SDCL 47-31B-102(2), does not include a finder.

(2) The term, broker-dealer, as defined in SDCL 47-31B-102(4), does not include a finder.

(3) The term, finder, means a person who directly or indirectly locates, introduces, or refers any person to an issuer. A finder may not:

(a) Render any investment advice as to the advantages or disadvantages of entering into an investment;

(b) Participate in any presentations or negotiations regarding any material term of an investment;

(c) Receive compensation based on the amount of any investment made but may otherwise receive compensation, and the compensation may be contingent on a potential investor actually investing;

(d) Receive any compensation unless the amount of compensation is disclosed by the issuer to the investor prior to the sale of any security.

(4) Compensation paid to a finder pursuant to this section does not destroy the exemptions from registration as set forth in SDCL 47-31B-202(14) or 47-31B-402(b)(5).

(5) A finder cannot engage in general solicitation to find investors for any private offering other than an entity as described in § 20:08:07:38(1)(a).

(a) The types of relationships with offerees that may be important in establishing that a general solicitation has not taken place are those that would enable the finder to be aware of the financial circumstances or sophistication of the persons with whom the relationship exists or a relationship that otherwise is of some substance and duration.

(b) If an issuer contracts in writing with a finder, and the contract requires the finder to comply with the finder rule as set forth in § 20:08:03:17, the issuer will not be denied an otherwise available exemption from registration even though the finder violates a provision of § 20:08:03:17. This subsection does not exempt the finder from any liability that may arise from a violation of § 20:08:03:17.

S.D. Admin. R. 20:08:03:17

33 SDR 63, effective 10/18/2006.

General Authority: SDCL 47-31B-605(a)(1) to (3), inclusive.

Law Implemented: SDCL 47-31B-401(H), 47-31B-402(b)(9).