In August, the Securities and Exchange Commission (“SEC”) has approved new Financial Industry Regulatory Authority (“FINRA”) rules allowing a person registering as a “Capital Acquisition Broker” (“CAB”) to meet lesser obligations than those that FINRA would apply to full broker-dealers. See SEC Release 34-78617, here. A CAB is defined to include a person: (i) advising an issuer on raising capital; (ii) advising on M&A transactions giving fairness opinions and other support for M&A transactions; (iii) advising in the preparation of securities offering materials; and (iv) acting as placement agent for unregistered securities to “institutional investors”. An “institutional investor” is unfortunately a higher threshold than “accredited investor”: (i) institutional accounts as already defined in the FINRA rules to include investors with $50 million in assets; (ii) qualified purchasers as defined in the Investment Company Act of 1940; (iii) certain retirement and benefit plans with at least 100 participants; (iv) banks, insurance companies and registered investment companies; and (v) certain governmental entities. The FINRA rules clarify that a CAB cannot: (i) underwrite registered offerings; (ii) privately place to investors who are not “institutional investors”; (iii) trade for proprietary purposes; (iv) fill customer buy/sell orders; (v) exercise investment discretion over customer accounts; (vi) handle customer funds or securities; or (vii) operate a crowdfunding platform. Although the new CAB rules are a welcome addition to FINRA discretion, they may be of limited utility because of their requirements, such as requiring that securities be sold to “institutional investors” instead of the lesser “accredited investors”.