The Securities and Exchange Commission’s Small Business Capital Formation Advisory Committee convened virtually on February 24, 2026, marking its first meeting of the year following the government shutdown that disrupted its schedule. The Committee’s agenda included a discussion of finders, a discussion of private secondary markets, and an update from the SEC’s Office of the Advocate of Small Business Capital Formation (“OASB”) on its report. The meeting included remarks from Chair Paul Atkins, Commissioner Mark Uyeda, and Commissioner Hester Peirce.
Regulation of Finders
As we’ve covered on this blog before, the Committee discussed the regulation of finders. Chair Atkins highlighted that identifying potential investors remains “one of the most persistent challenges for small businesses, especially those seeking capital below the range that typically attracts investment from venture capital firms or registered broker-dealers.” According to the Chair, regulatory uncertainty compounds these barriers by deterring individuals from serving as finders and companies from engaging them. Commissioner Uyeda articulated key principles that should be taken into account in formulating any approach for finders. He emphasized that “sound regulation practices recognize that rules should be appropriately tailored to the specific risk being addressed.” For example, he explained that if an intermediary serves a limited role, such as simply providing introductions, the full panoply of broker-dealer regulation would not appear necessary. Instead, overly burdensome regulations “can deter useful and productive capital formation efforts.” The Commissioner suggested policymakers consider which regulatory requirements are “so fundamental that they should apply irrespective of the limited transactional roles,” noting these “are likely to encompass only a small fraction of the broader SEC and FINRA rulebooks applicable to broker-dealers.” Commissioner Peirce characterized the current regulatory landscape as a “muddled web of no-action letters that is out of step with practical realities.”
Growth of the Private Secondary Markets; Balancing Private and Public Markets
Commissioner Peirce cited statistics on the growth of private secondary markets–from $162 billion in 2024 to $240 billion in 2025–reflecting demand for investment opportunities in private companies as well as a need for existing investors to obtain liquidity. The Commissioner noted that private market investors are increasingly able to turn to secondary markets to exit positions and reallocate capital. Tools such as continuation vehicles diminish pressure on companies to pursue IPOs.
Chair Atkins focused his comments on resale exemptions and blue sky laws. He noted that securities issued in exempt offerings are generally subject to resale restrictions for a period of time and “issuers may also impose additional transfer restrictions to maintain visibility into their shareholder base.” Secondary trading of private securities is “almost always subject to state blue sky laws,” creating a patchwork of compliance requirements. Individuals can sometimes navigate blue sky issues by complying with the “manual exemption;” however, relying on this resale exemption can be “costly and time consuming for both investors and issuers.” Chair Atkins referenced the Committee’s prior recommendation that the Commission preempt state blue sky laws for off-exchange secondary trading in companies that make available “robust, publicly accessible, and timely public disclosures, such as those required by Regulation A Tier 2.” He acknowledged this approach reflects “a sound instinct,” as many limitations on secondary trading are designed to protect investors who might otherwise lack access to adequate disclosure. However, he noted disclosure-based preemption “would not necessarily resolve the separate issue of company-imposed transfer restrictions beyond what current law requires,” suggesting more comprehensive solutions may be needed.
Noting the relationship between private secondary markets and the public markets, Commissioner Peirce asked–“if capital for companies and liquidity for investors and employees are available privately, why take on the burdens associated with being a public company?” She expressed her support for revitalizing the IPO market, emphasizing that “public markets facilitate price discovery and retail access in ways that the private secondary markets cannot duplicate perfectly.”
Clarity for Exempt Offerings
Commissioner Uyeda highlighted several recent staff initiatives aimed at providing regulatory clarity relating to offering exemptions, includingthe SEC staff’s FAQs on Form D that consolidate existing guidance. Commissioner Uyeda also highlighted the Division of Corporation Finance’s recent Compliance and Disclosure Interpretations (“C&DIs”), including guidance on Regulation A and Regulation CF.
Read the full remarks from Chair Atkins, Commissioner Uyeda and Commissioner Peirce.
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