Finder vs broker-dealer: the difference and what it means for referrals

The short answer

If an introduction you are paid for can lead to someone buying or selling securities, the finder-versus-broker question is real and needs securities counsel. If you introduce a company to a commercial service, such as licensing its operational records through SourceX, no securities change hands. That fact alone does not settle your position, so confirm with counsel how your activities and compensation are treated rather than assuming any finder exemption covers you.

The distinction matters most to M&A advisors, sell-side bankers, independent sponsors and anyone holding a FINRA registration, because their day jobs sit next to securities transactions even when a particular introduction does not.

What the law says about brokers and finders

A broker is defined by activity, not by title. Section 15(a)(1) of the Securities Exchange Act makes it unlawful for a broker or dealer to use the mails or interstate commerce to effect, induce or attempt to induce securities transactions unless registered, subject to listed exceptions, and section 15(a)(2) lets the SEC exempt brokers by rule or order. The SEC's guide to broker-dealer registration explains the definitions and the registration path: Form BD, membership in a self-regulatory organization, SIPC and state requirements.

Finder has no statutory definition and no federal registration category. In October 2020 the SEC proposed a conditional exemption that would have let natural persons act as finders helping issuers raise capital from accredited investors, in two tiers. The SEC's own 2025 meeting notice confirms it was proposed but never finalized.

The topic is live again. An SEC advisory committee recommended in February 2026 that the Commission address finders, and Chairman Atkins said that regulatory uncertainty deters individuals from serving as finders and companies from engaging them. Recommendations and speeches are not rules.

Section 15(b)(13), the statutory M&A broker exemption, took effect on March 29, 2023, the same day SEC staff withdrew their 2014 M&A Brokers no-action letter, as Morrison Foerster reported. It covers brokers effecting securities transactions solely in connection with transferring ownership of an eligible privately held company, broadly one with no registered securities and with EBITDA under $25 million or gross revenues under $250 million in the prior fiscal year, and it carries further conditions. Greenberg Traurig's alert notes that it does not cover capital raising and does not preempt state registration. It concerns securities transactions in M&A; it does not address introductions for a data license.

Finder vs broker-dealer side by side

When the broker question is live for an M&A advisor

Whenever securities are part of the transaction you are paid on. The table separates the common situations.

For the commercial meaning of the term itself, see what a finder's fee is.

How a SourceX referral reward is structured

These are the facts a counsel review will ask about. The partner introduces a US company through the referral form or a referral link and gives basic fit information. SourceX then qualifies the company, the company completes a data inventory, SourceX and the company agree price and terms, AI labs and data buyers review the opportunity, and the deal closes with delivery and payment to the company. The partner does not negotiate price, advise on terms, handle funds or touch data.

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company, payable only after the buyer pays and SourceX receives its fee. The reward comes from SourceX's fee and is never deducted from what the company receives. No shares or other securities of the company are bought or sold; the company keeps ownership of its data and grants a license. The page on when you get paid sets out the payment timing.

These facts help a lawyer analyze your position. They are not a legal conclusion, and nothing here says any exemption or safe harbor applies to SourceX partners.

Disclosure and consent good practice

• Get the client's permission before sharing its name with anyone.
• Tell the client in writing that you may receive a reward from SourceX's fee, and that it does not reduce the client's proceeds.
• Keep the referral separate from any M&A engagement fee, and check your engagement letter for terms on outside compensation.
• Share fit facts only; never forward, upload or describe confidential records.
• Keep a dated file of the disclosure, the client's consent and the introduction.

Questions to ask your counsel

1. Do any of my activities on this introduction amount to inducing a securities transaction?
2. Does my state regulate paid business introductions or finders separately?
3. If I am FINRA-registered, does my firm need to approve this as an outside activity, and under which rule?
4. Does my engagement letter restrict outside compensation or require specific disclosure?
5. How should the reward be documented and disclosed to the client?

This is general information, not legal, tax or financial advice. Confirm with your own counsel, tax adviser or professional body before acting.

Next step

Put these facts in front of your counsel once and keep the answer on file, then register as a partner. The referral overview for M&A advisors explains how introductions sit alongside a mandate, and the company fit checker gives a quick read on a client before you raise it. Companies that meet the baseline in who qualifies can also apply directly at sourcex.si/apply.