Is a finder's fee legal? Securities finders vs commercial referrals
Whether a finder's fee is legal depends mainly on what you introduce. Fees tied to securities transactions, such as capital raises or the sale of a company's stock, can require broker-dealer registration under Exchange Act section 15(a). An introduction for a commercial data license is a different question, shaped by the contract and your own professional rules.
The short answer: it depends on what is being introduced
Paid introductions are common in business, but once an introduction leads to a securities transaction, US federal law asks whether the person being paid is acting as an unregistered broker. That is where most finder's fee risk sits. An introduction that leads to a commercial contract, such as a data license in which no shares or ownership interests change hands, raises different questions: what the referral agreement says, what your professional rules allow and what you told your client.
Whether your own activities make you a broker is a fact-specific question for securities counsel. The rest of this page sets out what the rules say so you can ask the right questions.
What the securities rules actually say
Registration. Exchange Act section 15(a)(1) makes it unlawful for a broker or dealer to use the mails or interstate commerce to effect, or to induce or attempt to induce, securities transactions unless registered, subject to listed exceptions (15 U.S.C. 78o). The SEC's Guide to Broker-Dealer Registration explains the definitions of broker and dealer and what to do if you think you may be one.
No adopted finder exemption. In October 2020 the SEC proposed a conditional exemption for natural-person finders who help issuers raise capital from accredited investors (Release 34-90112). The SEC's own July 2025 meeting notice describes that exemption as proposed but not finalized (advisory committee agenda). The SEC's small business advisory committee has since recommended that the Commission address finders, in February 2026 (committee page), but a recommendation is not a rule.
The M&A broker exemption. Since the Consolidated Appropriations Act, 2023, section 15(b)(13) has exempted brokers effecting securities transactions solely in connection with transferring ownership of an eligible privately held company, defined by size limits of EBITDA under $25 million and/or gross revenues under $250 million in the prior fiscal year (check the statute for the exact test). Conditions apply, including no custody of the parties' funds or securities and no shell-company deals, and the exemption neither covers capital raising nor overrides state registration requirements (Greenberg Traurig summary).
Payments by FINRA members. FINRA Rule 2040 bars member firms and their associated persons from paying compensation to an unregistered person who would need to register as a broker-dealer by receiving it. If a broker-dealer is the one paying you, expect its compliance team to ask questions.
How this applies in common situations
| Situation | What to check | Outcome to confirm with counsel |
|---|---|---|
| You introduce investors to a company raising capital and are paid on the amount raised | Section 15(a), state securities law, and the fact that the 2020 proposal was never adopted | Whether you may accept transaction-based pay without registering |
| You introduce a buyer for a company sold by stock sale or merger | Whether section 15(b)(13) and its conditions fit, plus state rules | Whether your role and fee fit the exemption or need registration |
| A FINRA member firm offers to pay you for a deal introduction | Rule 2040 and the firm's documented basis | Whether the firm can pay you at all |
| You introduce a company to SourceX for a data license | The referral agreement, your professional rules, firm policy and client disclosure | That your role stays an introduction and your profession permits the fee |
| You hold a FINRA registration and make any paid introduction | Your firm's outside activity procedures | Approval before you accept compensation |
The fourth row is the one that applies to SourceX partners. A data license is a commercial contract for the use of records: the company keeps ownership and no securities change hands. That is why neither the 2020 finder proposal nor the M&A broker exemption addresses it, and neither should be read as covering it. It does not make every question disappear. CPAs, lawyers and regulated advisers still have fee and disclosure rules, which the referral fee disclosure letter template and the compliance review checklist work through.
Keep the referral role narrow and documented
In the SourceX program, partners introduce a company and give basic fit information only. You do not negotiate price or terms, hold or move money, handle the company's records or advise either side on the license. SourceX qualifies the company, the company and SourceX agree terms, and the partner reward is a share of SourceX's own fee. 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.
Disclosure and consent good practice
- Ask the owner's permission before you name the company to anyone.
- Tell the client in writing that you may be paid, by whom and on what basis.
- Review the agreement with the referral partner agreement checklist before you sign, and keep a copy on file. If referral agreements are new to you, start with what a referral fee agreement is.
Questions to ask your counsel or compliance team
- Do any of my current activities, such as capital introductions or sell-side work, make me a broker under federal or state law?
- If I hold a FINRA registration, what does my firm require before I accept outside compensation?
- Does my professional body restrict referral fees paid by a service provider to my clients?
- What written disclosure should my clients receive, and should they sign it?
- Does my engagement letter or a client NDA limit what I may say when making an introduction?
This is general information, not legal, tax or financial advice. Confirm with your own counsel, tax adviser or professional body before acting.
Next step
Once counsel has confirmed your position, register as a partner. The M&A advisor partner page shows where data licensing introductions fit alongside a sell-side practice.
- Step 1Share your linkSend your personal link to a company you know.
- Step 2Company appliesThe company applies itself at /apply.
- Step 3Buyer selects and paysThe buyer selects and pays for the data and SourceX receives its fee.
- Step 4You get your rewardYour share of SourceX fees becomes payable.
Common questions
What is the difference between a finder and a broker?
Federal securities law has no adopted category for finders; the SEC proposed one in 2020 and never finalized it. In everyday use, a finder only introduces parties, while a broker, as defined in the Exchange Act, is involved in effecting securities transactions for others and generally must register. Which side of the line you fall on depends on what you actually do and how you are paid.
Do state securities laws matter as well as federal law?
Yes. States run their own broker-dealer registration requirements, and the federal M&A broker exemption does not override them. A fee arrangement that works under federal law may still need review under the law of the state where you or the parties are located. Securities counsel can check both levels before you accept a fee tied to a securities transaction.
Does the M&A broker exemption cover introducing a company for a data license?
No. Section 15(b)(13) concerns brokers effecting securities transactions to transfer ownership of an eligible privately held company. A data license transfers no ownership: the company keeps its data and grants a license for agreed uses. The exemption simply does not address that situation, so it should not be cited as covering a data licensing referral in either direction.
Can a FINRA member firm pay me for an introduction?
FINRA Rule 2040 stops member firms and their associated persons from paying an unregistered person who would need to register as a broker-dealer by receiving the payment, and FINRA expects firms to document their basis for concluding that registration is not required. If a broker-dealer offers to pay you, expect questions, and get your own advice before agreeing.
Is the SEC likely to adopt a finder exemption soon?
Nobody can say. The 2020 proposal was never finalized, an SEC advisory committee returned to the topic at a July 2025 meeting, and the same committee recommended in February 2026 that the Commission address finders. Until a rule is actually adopted, plan around current law, which contains no general exemption for finders.
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By SourceX Partnerships Team · Published 2026-10-09 · Updated 2026-10-09
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