Introduction: A quiet revolution in private investing
Many people consider regulation dull. However, if you're involved with startups, alternative funds, or private placements, it's crucial to stay informed. Quietly, the SEC has been reevaluating the fundamentals of U.S. capital formation, specifically, the practical rules governing how startups raise funds and how investors discover and exit investments.
Two levers matter most for early-stage and growth investors: modernizing Regulation A and finally clarifying how non-broker "finders" can introduce issuers to accredited investors. The SEC's Small Business Capital Formation Advisory Committee (SBCFAC) put both topics on its 2025 agenda, including a dedicated discussion on exit and secondary-liquidity challenges for Reg A investors, and a separate session focused on the long-stalled finders framework.
For high-net-worth investors who like to get in early, these aren't technical footnotes - they're rails that can expand your deal flow, reduce legal fog, and improve your liquidity path.
Reg A lets companies raise public capital without becoming fully public. In 2020, the SEC raised the Tier 2 cap from 50 million to 75 million, a meaningful step that still left frictions in place.
In 2025, the SBCFAC focused on what still doesn't work, particularly investor exits and the patchwork around secondary trading, and gathered practitioner feedback on practical fixes. The agenda explicitly called out "exit opportunities for investors in Regulation A deals and secondary market liquidity challenges."
"Finders" are the connectors who introduce startups to accredited investors. The SEC floated a two-tier exemption in 2020 but never adopted it. In July 2025, Commissioner Hester Peirce urged the Committee to re-examine that approach and asked pointed questions about whether a different, more workable model is needed. Translation - the door is open to a simpler path that acknowledges how deals actually get done.
Legal and policy commentators have echoed the need for clarity in 2025, highlighting the shortcomings of the old two-tier design and the benefits of a narrower safe harbor calibrated to accredited-only introductions.
At VIP Wealth Advisors, many of our clients are accredited investors who like asymmetric-upside ideas:
The friction points are familiar:
When regulators tighten the bolts here - making Reg A usable and giving finders a defined lane - investors benefit. You get cleaner documents, clearer disclosures, and more legally durable pathways into deals.
Reg A offerings come in two tiers:
Issuers and investors still face real-world challenges after a successful raise: how and where will shares trade, and what information must be public for broker-dealers to quote those shares? The SEC and FINRA have spent the past few years clarifying 15c2-11 obligations in OTC markets - the rule that governs when broker-dealers can publish quotes. While the 2024 fixed-income no-action letter doesn't directly solve Reg A equity liquidity, it shows the staff's willingness to clarify quoting rules to reduce frictions in secondary markets.
Industry venues are evolving too. The OTC Markets Group updated tiers in 2025, replacing "Pink Current" with the "OTCID Basic Market," a sign of continued optimization in disclosure-driven OTC trading. For Reg A issuers, aligning disclosures to facilitate OTC quoting remains a practical path to secondary liquidity.
Some platforms also operate ATSs intended to trade Reg A, Reg CF, and Reg D shares - a step toward more consistent liquidity, even if actual quoting breadth remains thin today.
The SBCFAC highlighted several areas that could make Reg A more usable:
Even incremental moves here can unlock better outcomes. The Committee's 2025 agendas were explicit about considering investor exits and liquidity in Reg A, which has long been the Achilles' heel of otherwise successful raises.
Every private investor has seen this movie:
"Hey, a founder I know is opening a round - want an intro?"
That's a finder. Under the current regime, getting paid to introduce investors to issuers can pull you into broker-dealer territory. The SEC's 2020 proposal tried a two-tier carve-out for natural-person finders - allowing limited activity in accredited-only deals - but stalled amid concerns that the tiers were either too restrictive to be useful or too permissive to protect investors.
In July 2025, Commissioner Peirce essentially asked the Committee whether a cleaner approach would be better than trying to salvage the 2020 two-tier draft. Law-firm analyses this summer similarly outlined practical, narrower frameworks that could recognize real-world practices without opening the floodgates.
These two tracks are linked. Founders without big-firm VC access need efficient, compliant ways to raise. Investors need a clean route to evaluate, subscribe, and eventually exit positions. If Reg A becomes easier to use and finders get a workable safe harbor, the result is a healthier mid-market:
Multiple 2025 meeting notices and commentaries point to exactly this: focus on improving Reg A's use in the wild and finally settling the finder's question to support small-business fundraising.
While not the headline, there's an adjacent movement investors should clock. In March 2025, the SEC updated portions of its Compliance and Disclosure Interpretations that affect how issuers verify accredited status in Rule 506(c) offerings, reaffirming the "reasonable steps" facts-and-circumstances test and when a high minimum check size may contribute to verification. For investors, that can translate to more consistent subscription processes across private funds and syndications.
That matters because most early-stage allocations still flow through Reg D 506(b)/(c). Cleaner verification practices reduce friction, speed allocation decisions, and lower the odds that a misstep taints an otherwise good deal.
Here's how we're advising clients to get ahead of the curve as regulatory gears turn:
Map your deal flowFor years, accredited investors have faced a frustrating choice:
Reg A's 2020 increase to a 75 million cap helped, but didn't fix exits. The 2025 SEC advisory focus on Reg A secondary liquidity, along with a fresh look at the finders problem, is a meaningful signal that the Commission wants to make the middle market work better. None of this eliminates risk. But it does raise the floor on structure, transparency, and liquidity planning - exactly where many private deals have historically fallen short.
At VIP Wealth Advisors, we're closely tracking the Committee's discussions and any subsequent Commission actions, because small rule changes at the infrastructure layer can compound into better outcomes for sophisticated investors; more choice, clearer documents, and more realistic exit pathways.
Reg A lets companies raise public capital without being fully public, with Tier 2 now allowing up to 75 million in a 12-month period. For investors, that can mean better disclosures than a typical Reg D private placement and - if rules and venues continue to improve - clearer paths to liquidity.
Tier 1 allows up to 20 million but requires state-by-state qualification. Tier 2 allows up to 75 million and preempts state review but requires audited financials and ongoing reports, making it more like a mini-IPO.
It's still uneven. The SEC's advisory committee made secondary-liquidity challenges an explicit agenda item in 2025, and OTC Markets is evolving its tiers and disclosure expectations. Some platforms operate ATSs to support trading in Reg A, Reg CF, and Reg D shares, but actual quotation breadth remains limited. Expect gradual, not instant, improvement.
A finder introduces issuers to accredited investors. The SEC proposed a two-tier exemption in 2020 for natural-person finders, but it was never adopted. The SEC revisited the topic in 2025, with Commissioner Peirce urging consideration of alternatives to the old two-tier model. A clear safe harbor could professionalize intros without requiring full broker-dealer registration for limited, accredited-only activity.
Yes - clarity would reduce rescission risk tied to improper compensation, improve disclosure discipline, and align everyone on what intermediaries can and cannot do. 2025 commentary from securities practitioners underscores that a narrower, workable exemption could boost small-business fundraising without sacrificing investor protection.
In March 2025, the SEC updated parts of its Compliance and Disclosure Interpretations about accredited-investor verification, reaffirming a facts-and-circumstances approach and discussing when a high minimum check size may support verification. Expect more consistent, better-documented processes from serious issuers.
Ask how ongoing reporting will be handled, how the issuer will meet information requirements that enable broker-dealer quotations under 15c2-11, and which secondary venue - OTC markets or an ATS - they are targeting and why. You want a realistic exit narrative, not hand-waving.
The direction of travel is positive. With the SEC's advisory committee focused on Reg A usability and investor exits, and a reopened conversation on finders, the mid-market capital stack is getting attention it hasn't had in years. Better plumbing rarely makes headlines - but it makes your outcomes better.
Book a private consultation with VIP Wealth Advisors to explore how these SEC developments could affect your investment and tax strategy.