United States: Finders And Unregistered Broker-Dealers

Last Updated: December 9 2015
Article by Eric R. Smith and Parker B. Morrill

In the last few years, we have seen a number of important developments in the securities laws related to finders and broker-dealer registration requirements. Below we provide an overview of the broker-dealer registration requirement as it relates to finders who assist in matching issuers with investors or buyers and the latest developments in this area.

Overview

The distinction between being classified as a finder and a broker-dealer can have significant consequences. An unregistered broker-dealer may face sanctions from the Securities and Exchange Commission (SEC), and it may be unable to enforce payment for its services. In addition, transactions involving an unregistered broker-dealer may create a right of rescission in favor of the investors, allowing the investors the right to require the issuer to return the money invested. One example of the consequences of an unregistered broker-dealer occurred in the Ranieri Partners SEC enforcement action. In that action the SEC brought charges against a private-equity firm, its managing director, and a consultant because of the consultant's failure to register as a broker-dealer. The SEC's order found that the private equity firm paid transaction-based fees to a consultant, who was not registered as a broker-dealer, for soliciting investors for private fund investments.1

The federal securities laws do not specifically define the term "finder" or outline what finders can do. Instead, finders must avoid being deemed a broker or dealer under the federal securities laws unless they register as such with the SEC and the Financial Industry Regulatory Authority (FINRA). A broker is defined as "any person engaged in the business of effecting transactions in securities for the accounts of others."2 A dealer is defined as a person that is "engaged in the business of buying and selling securities ... for such person's own account," but excludes a person that buys and sells securities for its own account, but not as part of a regular business.3 Because the broker definition is the one that finders have the most trouble with, this discussion is focused on what activities may cause a finder to fall within the definition of a broker required to register with the SEC and FINRA.

To help determine whether certain activities bring someone within the definition of a broker, the SEC has revealed, through various no-action letters and other guidance, the various factors it considers when deciding whether a finder has violated the securities laws by failing to register as a broker-dealer. According to case law and SEC no-action letters, the following facts are typical of finders who would not need to register as a broker-dealer:

  1. Introduces investors to issuers or their promoters without further involvement in discussions between the issuer and the investor(s) and without giving advice on the investment's structure or suitability;
  2. Receives compensation for making introductions and the compensation is not tied to the success of the raising of capital (i.e., not a commission);
  3. Assists in transactions that convey all of a business's equity securities or assets to a single purchaser or group of purchasers; and
  4. Does not assist purchasers with obtaining financing, other than providing uncompensated introductions to third-party lenders or help with completing the paperwork associated with loan applications.

The following factors are typical of broker activity where the person involved may need to be a registered broker-dealer:

  1. Participates in discussions and negotiations between the issuer and the potential investors;
  2. Assists in structuring transactions;
  3. Receives transaction-based compensation, i.e., a commission or some form of compensation that varies with the size or type of the resulting investment;
  4. Engages in "pre-screening" potential investors to determine their eligibility to purchase securities;
  5. Engages in "pre-selling" the issuance to gauge the level of interest;
  6. Conducts or assists with the sale of securities;
  7. Provides advice regarding the value of securities;
  8. Locates issuers on behalf of investors;
  9. Solicits new clients;
  10. Disseminates quotes for securities or other pricing information;
  11. Actively (rather than passively) finds investors;
  12. Sends private placement memoranda, subscription documents, and due diligence materials to potential investors;
  13. Advises on portfolio allocations to accommodate an investment;
  14. Provides analyses of potential investments; and
  15. Provides potential investors with confidential information identifying other investors and their capital commitments.4

As these lists demonstrate, there is very little that a finder may do without crossing the line into activities that may trigger the requirement to register as a broker-dealer. No factor alone will determine whether a finder should register as a broker-dealer; all existing factors are considered together in making such a determination.

Nevertheless, some factors may carry more weight than others. One that appears to draw close attention from the SEC is the existence of transaction-based compensation, which often signals that the individual is more involved in the transaction than simply making introductions. The SEC has stated that "the federal securities laws require that an individual who solicits investments in return for transaction-based compensation be registered as a broker."5 In addition, one court stated, "[transaction-based compensation] is the hallmark of a salesman."6 Yet, the court rejected the notion that transaction-based compensation alone can trigger broker-dealer registration.7 The reason for the SEC's concern appears to be that the existence of transaction-based compensation creates a heightened incentive to engage in sales efforts, and the securities laws aim to regulate those who engage in selling securities.

M&A Brokers

In 1985, the U.S. Supreme Court held in Landreth Timber Co. v. Landreth that the sale of all or a controlling interest in a business is a securities transaction.8 Therefore, a person involved in facilitating the sale of an operating business could fall within the definition of a broker as defined in the Securities Exchange Act of 1934 (Exchange Act). There has been a great deal of ambiguity in this area ever since that decision.

In a no-action letter released on January 31, 2014, the SEC's Division of Trading and Markets (the Division) provided some helpful guidance for financial advisors involved in the sale of a private company (M&A Brokers). The Division stated that it would not recommend enforcement action to the SEC if an unregistered M&A Broker were to effect securities transactions in connection with the transfer of ownership of a privately held company, provided that the transaction complies with the terms and conditions described in the Division's no-action letter.

According to the no-action letter, an "M&A Broker" is limited to:

effecting securities transactions solely in connection with the transfer of ownership and control of a privately-held company through the purchase, sale, exchange, issuance, repurchase, or redemption of, or a business combination involving, securities or assets of the company, to a buyer that will actively operate the company or the business conducted with the assets of the company.

There are a number of conditions in the no-action letter that the Division expects an M&A Broker to meet. The key conditions that the Division listed are:

  1. The M&A Broker will not have the ability to bind a party to an M&A transaction;
  2. The M&A Broker will not provide financing for an M&A transaction;
  3. The M&A Broker will not have custody, control, or possession of securities or funds in connection with the M&A transaction;
  4. No party to the M&A transaction will be a shell company, other than a business combination related shell company;
  5. The M&A transaction will not involve a public offering and is exempt from registration;
  6. If the M&A Broker represents both buyers and sellers, it will provide clear written disclosure as to the parties it represents and obtain written consent from both parties to the joint representation;
  7. The M&A Broker will not assist in the formation of a group of buyers for M&A transactions that it facilitates;
  8. The buyers or group of buyers will, upon completion of the M&A transaction, control and actively operate the company or the business conducted with the assets of the business;
  9. The M&A transaction will not result in the transfer of interests to a passive buyer or group of buyers;
  10. The securities received by the buyer will be restricted securities; and
  11. The M&A Broker and its officers, directors, and employees have not been:
  • Barred from association with a broker-dealer by the SEC, any state or any self-regulatory organization; or
  • Suspended from association with a broker-dealer.

This no-action letter does not affect state law on the matter. The North American Securities Administrators Association (NASAA) proposed a uniform state model rule that would provide an exemption for M&A Brokers from registration as brokers, dealers, and agents under state law.9 However, nothing has been finalized as of the date of this article.

Foreign M&A Brokers have also been granted relief from broker-dealer registration. In a no-action letter in May 2013, the Division provided guidance allowing for a foreign person to interact with a U.S. target company in establishing and developing an M&A transaction without facing broker-dealer registration if:

  1. The U.S. target is using internal or group-level personnel with relevant M&A experience or an external advisor, such as a broker-dealer or other relevant professional;
  2. The foreign M&A Broker does not receive, acquire, or hold funds or securities in connection with the transaction;
  3. The foreign M&A Broker does not represent or advise the U.S. target company in any regard with respect to the transaction; and
  4. The M&A Broker complies with the antifraud provisions of the U.S. securities laws.10

It is important to note that the foreign M&A Broker who requested no-action relief also made the representation that it would only approach "Major U.S. Institutional Investors," as defined in Rule 15a-6(b)(4) under the Exchange Act.

FINRA Guidance

FINRA recently took action to clarify the requirements for registered broker-dealers who deal with finders and how its rules fit with the securities laws. FINRA recently issued Rule 2040, effective August 24, 2015, in an effort to align broker-dealer activity with Section 15(a) of the Exchange Act and provide guidelines relating to the payment of transaction-based compensation by member firms to unregistered persons. The rule states that registered broker-dealers may not pay "any compensation, fees, concessions, discounts, commissions or other allowances to any person that is not registered as a broker-dealer, but by reason of receipt of any such payments and the activities related thereto, is required to be so registered under applicable federal securities laws and Exchange Act rules and regulations." Broker-dealers must look to SEC rules to determine whether the activities in question require registration as a broker-dealer under Exchange Act Section 15(a). Broker-dealers can support their determination by, among other things:

  1. Reasonably relying on previously published releases, no-action letters, or interpretations from the SEC staff that apply to their facts and circumstances;
  2. Seeking a no-action letter from the SEC staff; or
  3. Obtaining a legal opinion from independent, reputable U.S. licensed counsel knowledgeable in the area.

Broker-dealers must maintain books and records that reflect the member firm's determination.

A carveout is provided in FINRA Rule 2040(c) for foreign finders, allowing a broker-dealer to pay transaction-related compensation to non-registered foreign finders, where the finders' sole involvement is the initial referral to the broker-dealer of non-U.S. customers. However, several conditions apply. See the rule for further details.11

Investment Platforms for Private Placements

Rule 506 of Regulation D provides a safe harbor for private offerings conducted under the exemption from registration in Section 4(a)(2) of the Securities Act of 1933. Certain websites are in the business of connecting private companies with accredited investors to effect private offerings pursuant to Rule 506.

The JOBS Act provided a limited exemption from registration as a broker-dealer for private placements done under Rule 506 of Regulation D. The exemption extends to investment platforms that would be required to register as a broker-dealer because of involvement in offerings made pursuant to Rule 506 of Regulation D under the Securities Act. This exemption is available to a person or any person associated with that person who:

  1. Maintains a platform (e.g., website) that permits the offer, sale, purchase, or negotiation of or with respect to securities, or permits general solicitation or advertisements by issuers of such securities;
  2. Co-invests in such securities; or
  3. Provides ancillary services (as defined in the statute, e.g., due diligence services) with respect to such securities:

The person qualifies for the exemption if:

  1. It does not receive compensation in connection with the purchase or sale of the security;
  2. It does not take possession of customer funds or securities in connection with the purchase or sale of the security; and
  3. It is not disqualified by "bad actor" provisions.12

Investment Platforms for Private Funds

In March of 2013, the SEC provided no-action relief from the broker-dealer registration requirements for operators of certain investment platforms that involve marketing activities for investments in private funds. Two no-action letters were issued: one to an investment platform for "angel investing" (AngelList)13 and another to an investment platform for venture capital investing (FundersClub).14

FundersClub posts information on its website about investments in start-up companies. The information is available only to FundersClub members, all of whom have been pre-screened as accredited investors. Once investment interest and investor qualifications are confirmed, an investment fund is formed, and FundersClub negotiates the final terms of the investment fund's investment. Funds are directed to a custody account at a custodian bank or trust company. FundersClub then oversees the investments and provides consulting and management assistance to the companies. FundersClub is compensated only by receiving a percentage of the profits from the investment fund (i.e., carried interest). The Division of Trading and Markets granted no-action relief to FundersClub from broker-dealer registration, based particularly on the following representations:

  1. FundersClub advises and manages only venture capital funds;
  2. FundersClub receives compensation (i.e., carried interest) for its services, the nature of which are traditional advisory and consulting services, and not transaction-based compensation;
  3. Officers, directors, and employees of FundersClub personally do not receive transaction-based compensation for their efforts in raising investment funds;
  4. Full and fair disclosure is made to investors about FundersClub's compensation and fees;
  5. FundersClub does not receive the administrative fees and any remainder is distributed to investors;
  6. FundersClub is unable to withdraw any deposited funds from the custody account for its own use; and
  7. Neither FundersClub, nor any subsidiary, principal, employee, board member, controlling shareholder, or other associated persons are subject to "bad actor" disqualification.

The AngelList no-action request provided that AngelList form a wholly owned subsidiary, AngelList Advisors LLC (AngelList Advisors), to register as an investment adviser with the SEC or one or more states. AngelList Advisors provides an angel investing platform as part of its website that assists accredited investors in identifying companies that seek capital and in which one or more investors intend to invest. Once an angel investor (Lead Angel) and a company are matched, a separate investment vehicle (i.e., limited liability company or limited partnership) is formed and made available to investors through the platform. AngelList Advisors lines up interest from investors in the portfolio company, and the funds are then transferred directly to the bank account set up for the investment vehicle. AngelList Advisors then manages the investments and is compensated only by receiving a percentage of the profits from the investment fund (i.e., carried interest).

The Division stated it would not recommend enforcement action if AngelList Advisors operated the platform without registering as a broker-dealer. The key representations forming the basis for the Division's letter include:

  1. AngelList Advisors is a registered investment adviser with the SEC or one or more states;
  2. AngelList Advisors provides investment advice and administrative services to the investment vehicle;
  3. AngelList Advisors operates an internet-based platform that is available exclusively to accredited investors;
  4. Investments are offered and sold in compliance with Rule 506 of Regulation D;
  5. AngelList Advisors and any Lead Angel receive compensation equal to a portion of the increase in value, if any, of the investment and do not receive transaction-based compensation;
  6. AngelList Advisors' and the Lead Angel's services are traditional advisory and consulting in nature;
  7. No officer, director, or employee of AngelList Advisors or any Lead Angel receives transaction-based compensation in connection with the investments;
  8. The specific terms of any compensation paid to AngelList Advisors or any Lead Angel are described in the relevant offering document;
  9. Neither AngelList Advisors nor any Lead Angel handles any customer funds or securities;
  10. Neither AngelList Advisors nor any Lead Angel solicits investors other than on the website;
  11. Neither AngelList Advisors nor any Lead Angel nor any principal, employee, board member, controlling shareholder, or other associated persons of AngelList, AngelList Advisors, or Lead Angels are disqualified by "bad actor" provisions.

Although these no-action letters are specific to the entities seeking no-action relief, the insight provided by the various factors indicates which activities the SEC finds acceptable for an unregistered broker-dealer.

Crowdfunding

On October 30, 2015, the SEC adopted final rules for crowdfunding pursuant to Part III of the JOBS Act (Regulation Crowdfunding). Under this exemption from registration, issuers may issue up to $1 million in a 12-month period. These offerings are conducted through a new regulated entity called a "funding portal" that is exclusive to offerings made pursuant to Regulation Crowdfunding. A funding portal is exempt from broker-dealer registration when conducting crowdfunding transactions, but it must follow certain guidelines. For further details, see our client alert, SEC Adopts Final Rules for Securities-Based Crowdfunding, dated November 11, 2015.15

People often refer to other types of offerings as crowdfunding offerings, e.g., private offerings conducted pursuant to Rule 506 of Regulation D through investment platforms. However, only offerings conducted according to the requirements of Regulation Crowdfunding are eligible for the exemptions provided therein. Intermediaries conducting offerings pursuant to Rule 506 or some other exemption from registration cannot rely on the broker-dealer exemption provided for funding portals in Regulation Crowdfunding.

Potential Regulatory Action

On April 5, 2013, David W. Blass, Chief Counsel of the Division of Trading and Markets at the SEC, gave a speech in which he mentioned that the SEC, in collaboration with FINRA, has been in discussions with interested groups about how the broker-dealer registration requirements apply to placement agents, finders, and business or M&A brokers.16

Additionally, the SEC Advisory Committee on Small and Emerging Businesses (the Committee) has been exploring the development of a less onerous regulatory scheme for placement agents, finders, and M&A brokers. In a presentation to the Committee on June 3, 2015, Committee member Gregory C. Yadley noted that the registration process for a broker-dealer is too burdensome for finders, and an exemption or separate registration process should be provided.17 Mr. Yadley noted in his presentation that the current broker-dealer registration system is overwhelming; a finder working for smaller businesses would find it unreasonable to maintain minimum net capital, submit audited financial statements, or maintain the compliance infrastructure required of a full-service brokerage firm.18 The SEC, FINRA, American Bar Association, and NASAA have all been involved in discussions regarding this issue, and it is possible that we could see a less stringent registration process for finders in the future.

To that end, the Committee submitted formal recommendations to SEC Chair Mary Jo White on September 23, 2015.19 The Committee recommended that the SEC:

  1. Clarify that broker-dealer registration is not required of a person who receives transaction-based compensation solely for providing names of, or introductions to, prospective investors;
  2. Provide an exemption from federal broker-dealer registration to intermediaries who are actively involved in the discussions, negotiations, and structuring, as well as the solicitation of prospective investors, for private financings on a regular basis, conditioned upon registration as a broker under state law;
  3. Coordinate state regulation with NASAA and FINRA; and
  4. Take immediate steps to address issues regarding regulation of intermediaries in small business capital formation transactions rather than waiting until the development of a comprehensive solution.

Conclusion

A determination of whether an intermediary is acting as a finder or an unregistered broker-dealer is a very fact-specific analysis and can often be very complex. Unfortunately for unwary entrepreneurs, company executives, and equity fund sponsors, frequently a third party assisting with capital-raising will be acting as a broker-dealer, not a finder, and therefore should not be engaged unless properly registered. It is likely that we will see further clarification or new rules from regulators in the future; regardless, it is important to always carefully consider the involvement of finders or broker-dealers in any capital-raising endeavor.

Footnotes

1 For further details, see our client alert on this action, Finders May Pose Risk in Private Capital Raising (Mar. 2013).

2 15 U.S.C. § 78c(a)(4).

3 Section 3(a)(5), Exchange Act.

4 See Mike Bantuveris, SEC No-Action Letter (Oct. 23, 1975); Country Business, Inc, SEC No-Action Letter (Nov. 8, 2006); Putnam Investor Services, Inc., SEC No-Action Letter (Dec. 31, 2009); Brumberg, Mackey & Wall, P.L.C., SEC No-Action Letter (May 17, 2010); Nemzoff & Co., LLC, SEC No-Action Letter (Nov. 30, 2010); and SEC Guide to Broker-Dealer Registration, Division of Trading and Markets (Apr. 2008).

5 Securities Exchange Act Release No. 69091 (Mar. 8, 2013); Securities Exchange Act Release No. 69090 (Mar. 8, 2013).

6 SEC v. Kramer, 778 F.Supp.2d 1320, 1334 (M.D. Fla., 2011).

7 Id.

8 471 U.S. 681 (1985).

9 The first request for comments was made in January 2015. See Notice of Request for Comment Regarding a Proposed NASAA Model Rule Exempting Certain Merger and Acquisition Brokers from Registration Pursuant to State Securities Acts (Jan. 2015). A second request for comments was made in April 2015, and the comment period expired on May 17, 2015. See Notice of Request for Additional Comments Regarding a Proposed NASAA Model Rule Exempting Certain Merger and Acquisition Brokers form State Registration (Apr. 2015).

10 See Roland Berger Strategy Consultants, SEC No-Action Letter (May 28, 2013).

11 See FINRA Regulatory Notice 15-07 (Mar. 2015).

12 The Division of Trading and Markets provided additional guidance on this exemption in a set of Frequently Asked Questions posted on the SEC's website on February 5, 2013.

13 See AngelList LLC, SEC No-Action Letter (Mar. 28, 2013).

14 See FundersClub Inc. & FundersClub Mgm't LLC, SEC No-Action Letter (Mar. 26, 2013).

15 See  SEC Adopts Final Rules for Securities-Based Crowdfunding (Nov. 11, 2015).

16 See David W. Blass, A Few Observations in the Private Fund Space (Apr. 5, 2013).

17 See Gregory C. Yadley, Notable by Their Absence: Finders and Other Financial Intermediaries in Small Business Capital Formation (June 3, 2015).

18 Id.

19 See Letter to The Honorable Mary Jo White from the Sec. and Exch. Comm'n Advisory Comm. on Small and Emerging Companies (Sept. 23, 2015).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.