The Securities and Exchange Commission’s Small Business Capital Formation Advisory Committee announced that it will hold a public meeting at the SEC Headquarters in Washington, D.C., on Tuesday, Feb. 24, 2026, at 10 a.m. ET. The timing matters. The committee plans to continue its discussion on the regulatory framework for finders—individuals or entities connecting small businesses with capital providers—and begin exploring the burgeoning private secondary market.
Known for its complex nature, the regulatory environment surrounding finders has been a topic of debate for years. The committee’s decision to revisit this framework highlights ongoing concerns among small business advocates about access to capital. That’s changed.
Finders play a pivotal role in assisting small businesses to secure funding by introducing them to potential investors. But there’s a catch: finders have historically operated in a regulatory gray area. Currently, under the federal securities laws, finders who engage in activities deemed as broker-dealer activities must register with the SEC. Yet many small businesses argue that this requirement can be burdensome and stifle their fundraising efforts.
In previous meetings, the committee deliberated on whether finders should have an exemption from certain registration requirements if they limit their activities to referring accredited investors to small businesses seeking capital. This proposal aims to simplify the process for small businesses while ensuring investor protection.
The catch: Defining the limits of such an exemption remains challenging. Critics argue that without clear boundaries, it could lead to exploitation or inadequate investor safeguards. Investor protection is non-negotiable.
The SEC has been cautious about altering regulations without comprehensive data supporting any change. According to some committee members, it’s imperative that any new policy maintains necessary oversight but removes unnecessary regulatory burdens for finders engaged in limited activities.
While the primary focus will be on finders, the meeting will mark the beginning of discussions into the private secondary market—a segment where private securities are bought and sold post-issuance. This market has gained traction as companies delay public offerings longer than before.
Historically, secondary markets served as platforms for trading publicly listed stocks. Not anymore. Today, they are evolving spaces (in their literal sense) allowing stakeholders—primarily early investors and employees—to liquefy their holdings without waiting for an IPO.
According to recent reports, there’s growing interest among large institutional investors in accessing these private shares before they hit public markets. But concerns linger over transparency and efficiency within these transactions.
The committee’s exploration could eventually lead to recommendations on how these markets might be better structured and regulated to protect both buyers and sellers while fostering capital formation.
Jennifer Johnson—a seasoned finance attorney who serves on the committee—noted that any consideration of regulatory changes must balance innovation with investor confidence. “We need robust frameworks that do not deter growth,” she said during last year’s session discussing similar topics.
A notable aspect of these discussions includes potential parallels with existing frameworks abroad where secondary trading of private equity is more established (such as Europe). However, adapting these models requires careful analysis due to differences in legal systems and business practices.
This meeting follows recent trends where more startups opt for extended periods as private entities fueled by ample venture capital funding rather than rushing towards IPOs—a phenomenon reshaping traditional pathways companies take towards liquidity events.
But will this shift impact other areas? Some analysts speculate it could influence how firms approach initial valuations or strategic decisions leading up-to-public offerings—but details remain speculative until concrete models emerge from ongoing assessments like those pursued by Johnson’s team at SEC headquarters next month.
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