Navigating SEC rules and regulations around broker registration can be difficult if you're unsure whether you fall beneath the safe harbor of the issuer exemption.
Rule 3a4-1 provides "non-exclusive safe harbor from the broker-registration requirement...for certain associated persons of issuers." It is important to note that the issuer as an entity is not eligible.
To take advantage of the safe harbor, an associated person must satisfy three preliminary requirements and one of three alternative conditions. We break down these requirements and how to determine if you qualify.
The SEC can pursue action against issuers who have not correctly registered under Section 15 of the Exchange Act, including injunctive relief, disgorgement, and civil penalties, to protect investors from future harm and to prevent future violations by the issuer.