In an April 14, 2026, letter, the Securities and Exchange Commission’s (SEC) Small Business Capital Formation Advisory Committee (the Committee) submitted recommendations to SEC Chairman Paul Atkins to improve the regulatory framework governing “finders,” in this case, natural persons who engage in certain limited capital-raising activities on behalf of issuers without registering with the SEC as broker-dealers.

In an effort to promote small business capital formation, the Committee explored potential improvements to the rules governing finders. Through its work, the Committee concluded that there is a lack of appropriate intermediaries for small capital raises, in part due to perceived ambiguities in the broker-dealer registration requirements. The Committee strongly endorsed the general concept of a framework to permit certain unregistered finders to engage in capital-raising activities, and set forth the following principles when considering such a framework: (i) finders play an important role in facilitating the flow of capital to small and emerging businesses, and the current regulations discourage finder activity; (ii) there is a strong need for regulatory clarity to distinguish finder activity from broker-dealer services, and accordingly, finder activity should fall under a limited exemption from broker-dealer regulations; (iii) federal preemption of state regulations should be considered when evaluating the effectiveness of any potential regulations or exemptions; (iv) prior SEC proposals with respect to finder activities, especially regarding a finder’s ability to contact investors or comment on the terms of investment, were overly restrictive, and any potential proposal should permit finders to communicate with potential investors about the nature of the issuer and the terms of the financing; (v) it may be appropriate to require certain disclosures (e.g., the identity of any finders, fees paid to finders, and any relationships between the finder and the issuer or other investors) so long as such requirements are not overly burdensome; (vi) the registration process for finders, if any, should be minimal and open to non-professional participants to complete without needing assistance from professional advisors; and (vii) it may be appropriate to require oversight of, or responsibility for, finder activity by issuers so long as such requirements are not overly burdensome.

The Committee also reaffirmed its prior recommendations regarding a regulatory framework for finders originally presented in its Nov. 13, 2020 letter to former SEC Chairman Jay Clayton: (i) the framework should be simple; (ii) the framework should keep out bad actors; (iii) the SEC should consider a notice filing requirement for all finders, which would include information on finders’ fees; (iv) the SEC should coordinate with state securities regulators on the framework; (v) the framework should provide certainty to both finders and issuers with respect to how finders can assist with capital formation for small businesses; (vi) the SEC should consider a blanket exemption for finders for offerings under a certain size; (vii) the SEC should consider the issue of finders’ fees, including reasonableness and/or limits thereto; and (viii) the SEC should provide clarity on prohibited and permissible activities.

It remains to be seen whether the SEC will act on the Committee’s recommendations and what form any changes to the rules that currently govern finders will take. Until then, the current broker-dealer rules remain in effect for finders, and unregistered persons seeking to receive compensation for finding investors in securities should consult with counsel to ensure that such compensation complies with all applicable law.