Rosemary Fanelli’s Forbes Article: Four Steps to Avoiding Broker-Dealer Issues for Private Equity Firms

Rosemary Fanelli, managing director in the Compliance and Regulatory Consulting practice, contributed a piece to Forbes containing advice for private equity firms on how to avoid broker-dealer issues.

"Over the past several years, private fund managers have increasingly created their own, in-house broker-dealers. This is because it is unlawful for a non-broker-dealer to accept a commission in connection with the sale of securities. Without a formally registered entity, fund managers are prohibited from compensating sales staff through a commission pool. They are also barred from accepting a fee for providing banking advisory services even though they might logically relate to responsible portfolio management. Having a broker-dealer means that private equity managers are permitted to accept transaction-based compensation in connection with raising capital for their portfolio companies, or assisting in connection with the company’s sale – something that may be desirable given the manager’s expertise, relationships and investment objectives."

A copy of Rosemary's article is available here.


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