SEC Committee Discusses Finders Regulation, Eyes Private Secondary Market

The Securities and Exchange Commission’s Small Business Capital Formation Advisory Committee announced it will hold a public meeting at 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 work on the regulatory framework for “finders” — individuals or firms that connect small businesses with potential capital providers — and begin exploring the fast-growing private secondary market.

The regulatory environment around finders has been debated for years because it sits in a difficult middle ground: small businesses want simpler access to capital, while regulators want to keep investor protections intact.

Finders can play a meaningful role for smaller companies by introducing founders to investors. But they’ve historically operated in a gray zone. Under federal securities laws, finders whose activities cross into broker-dealer territory may need to register with the SEC — a process many small businesses say is costly, slow, and discouraging for modest fundraising efforts.

In prior meetings, the committee discussed whether a limited exemption could work — for example, allowing certain finders to refer accredited investors to small businesses without full registration, provided their activities remain strictly defined. The goal would be to reduce friction for capital formation while still preserving safeguards.

The challenge is where the line gets drawn. Critics warn that vague boundaries could invite abuse, create conflicts of interest, or weaken protections for investors. That’s why any exemption would likely need clear limitations, strong disclosure standards, and enforcement clarity.

The SEC has historically moved cautiously on this topic, often emphasizing that changes should be evidence-driven. Some committee members have argued that the best path forward is a framework that maintains oversight where needed, but removes unnecessary burdens for genuinely limited referral activity.

Alongside the finders discussion, the meeting will also begin examining the private secondary market — where private company shares are bought and sold after issuance. This segment has grown as more companies stay private for longer, delaying traditional public listings.

Secondary markets used to be associated mainly with publicly listed stocks. Today, private secondary transactions are increasingly used by early investors and employees to access liquidity without waiting for an IPO. But the growth of this market also brings concerns around transparency, pricing efficiency, and information asymmetry between buyers and sellers.

Recent reporting has pointed to rising interest from large investors seeking exposure to private shares before they reach public markets. Yet questions remain about how deals are structured, how valuations are established, and what protections exist for participants on both sides of the trade.

The committee’s exploration could eventually translate into recommendations on how private secondary markets should be structured — aiming to protect buyers and sellers while supporting broader capital formation.

Jennifer Johnson, a finance attorney serving on the committee, has previously emphasized that regulatory updates need to balance innovation with investor confidence. Any framework, in her view, should encourage growth without creating blind spots that undermine trust in the market.

Some observers also point to frameworks overseas — including parts of Europe — where secondary trading in private equity is more established. Still, importing models is not straightforward, given differences in legal definitions, enforcement structures, and market practices.

The broader backdrop is clear: startups are staying private longer, fueled by deep venture funding, and the pathways to liquidity are changing. What remains to be seen is whether the SEC will eventually push toward a clearer, more workable structure for finders — and whether it will seek more formal guardrails around private secondary trading as this market continues to expand.