U.S. Securities and Exchange Commission Commissioner Peirce seeks advice on changes to Regulation A and a finder exemption from broker dealer registration

In a speech to the U.S. Securities and Exchange Commission’s Small Business Capital Formation Advisory Committee, SEC Commissioner Hester M. Peirce asked members to develop recommendations on how to make Regulation A a more effective capital-raising tool and to revisit potential exemptive relief for “finders” who connect entrepreneurs with investors without registering as broker-dealers. Peirce argued that uncertainty over when introductions and related activities trigger broker-dealer registration creates transaction costs and has pushed finders and issuers to rely on fact-specific SEC staff no-action letters. She pointed to the SEC’s October 2020 proposed exemptive order for natural persons conducting limited issuer-related activities, but noted criticisms of its two-tier approach, including concerns that proposed Tier 1 conditions such as a one-transaction-per-year limit and no investor contact would make it impractical. The speech set out questions for the committee on whether the 2020 proposal remains a viable starting point or needs redesign, whether a full rulemaking process would be preferable, whether any exemption should be tied to an offering-size cap, whether it should cover secondary offerings, and whether it should be limited to natural persons or extend to other structures. The committee’s meeting discussions are intended to inform its forthcoming recommendations to the Commission.