How Britehorn Securities Chaperones Foreign Broker-Dealers & Allows Payments to Foreign Finders

Cross-border opportunities are increasingly part of the deal landscape for independent investment bankers and placement agents. Whether you are a foreign broker-dealer (or similarly regulated entity) seeking to raise capital from U.S. institutional investors, or a U.S.-based registered representative looking to compensate a foreign finder who can introduce offshore investors, specific FINRA and SEC rules become central to how the engagement must be structured. Two key frameworks govern these arrangements:

• SEC Rule 15a-6 (Foreign Broker-Dealer Exemption through a U.S. “Chaperone”)

• FINRA Rule 2040(c) (Foreign Finder Exemption)

At Britehorn Securities, we offer services as a U.S. registered broker-dealer that can "chaperone" foreign broker-dealers, as well as empower our registered representatives to work with foreign finders when marketing their U.S. deals — making cross-border arrangements compliant and executable.

SEC Rule 15a-6 — The “Chaperone” Model

What Is Rule 15a-6?

SEC Rule 15a-6 provides conditional exemptions from U.S. broker-dealer registration for certain foreign broker-dealers engaging in securities activities involving U.S. investors.

The rule allows foreign broker-dealers to:

• Provide research to major U.S. institutional investors

• Solicit and effect transactions with U.S. institutional investors

• Engage in M&A advisory or private placement activity

• Communicate with certain U.S. persons

In most solicited transaction scenarios — this must occur through a U.S. registered broker-dealer acting as a “chaperone.”

What Is a Foreign Broker-Dealer?

The SEC defines a foreign broker-dealer as:

“Any person engaged in the business of effecting transactions in securities outside the United States who is registered or licensed under the laws of a foreign country to engage in the securities business, or, if not required to be so registered, is actually engaged in such business and is regulated as such in that country.”

Accordingly, the foreign party must be subject to substantive securities regulation in its home jurisdiction — but it doesn't necessarily have to be a "broker-dealer" as we define it in the United States.

A subtle but critical question arises when a foreign entity conducts securities-related business in a jurisdiction that does not require registration as a broker-dealer. In such cases, the SEC still expects that the entity be "regulated as such" — meaning that it must be subject to active oversight by a governmental or self-regulatory authority responsible for securities markets, not merely a general commercial authority. To substantiate "regulated abroad" status when local registration is not required, the U.S. broker-dealer must demonstrate a meaningful nexus to a financial regulatory framework. The SEC has consistently interpreted "regulated" to mean subject to securities-specific oversight, including compliance obligations, audits, and potential enforcement by a regulator equivalent to FINRA or the SEC.

What Does a Chaperone Do?

A chaperoning arrangement allows a foreign broker-dealer to engage with specified U.S. institutional investors while the U.S. broker-dealer supervises, records, and assumes compliance responsibility for all U.S.-based activities.

Under SEC guidance, the chaperoning broker-dealer must :

• Effect the securities transactions

• Maintain books and records

• Participate in or monitor required communications

• Ensure compliance with U.S. securities laws

When Britehorn acts as chaperone under Rule 15a-6, we assume significant regulatory responsibility. This is not a “paper arrangement.” It is a substantive supervisory relationship where our highly experienced, licensed Principals directly participate in the oversight of opportunities being marketed to U.S. institutional investors.

FINRA Rule 2040(c) — The Foreign Finder Exemption

While Rule 15a-6 governs foreign broker-dealers accessing U.S. institutional investors, FINRA Rule 2040(c) governs the ability of registered representatives based in the United States to pay transaction-based compensation to certain foreign finders who introduce foreign investors to their U.S. offerings.

Who Qualifies as a Foreign Finder?

Under FINRA Rule 2040(c), a U.S. broker-dealer may pay a foreign finder a success fee without requiring the finder to register, provided:

• The finder is not a U.S. resident

• The finder is not a dual U.S. citizen

• The finder conducts all activities outside the United States

• The finder introduces only foreign investors

To rely on Rule 2040(c), disclosures must be made, which typically include:

• The identity of the foreign finder

• The nature of the compensation arrangement

• That the finder is not registered in the U.S.

• That the finder may not be subject to U.S. regulatory oversight

How Britehorn Securities Can Help

At Britehorn Securities, we specialize in building compliant cross-border structures that withstand SEC and FINRA scrutiny — while allowing capital to move efficiently across jurisdictions. As a FINRA-registered broker-dealer, Britehorn Securities can:

Serve as Rule 15a-6 Chaperone

• Enter into formal chaperone agreements with regulated foreign entities

• Supervise U.S. institutional investor interactions

• Effect private placements or M&A advisory transactions

• Share transaction-based compensation lawfully

Structure Foreign Finder Arrangements

• Confirm eligibility under FINRA Rule 2040(c)

• Ensure required investor disclosures

• Maintain required supervisory records

• Allow transaction-based payments to foreign finders

If you are a foreign broker-dealer (or similarly regulated entity) seeking U.S. institutional access — or a U.S. issuer raising capital abroad — we would be happy to discuss how we can serve as your regulatory bridge. Contact us today to learn more.