De Silva Law Offices Files SEC Rulemaking Petition for a Finder's Exemption
R Tamara de Silva | March 17, 2026
Today, De Silva Law Offices, LLC filed a formal rulemaking petition with the U.S. Securities and Exchange Commission pursuant to 17 C.F.R. § 202.8, requesting that the Commission initiate a full notice-and-comment rulemaking to adopt a conditional exemption from the broker registration requirements of Section 15(a) of the Securities Exchange Act of 1934 for certain activities of finders. The petition is addressed to Chairman Paul S. Atkins and all five Commissioners, with copies to the Office of the Secretary, the Division of Trading and Markets, and the Office of the Advocate for Small Business Capital Formation.
A copy of the petition is available for download below.
Why This Matters
The finder exemption is not a niche regulatory question. It is one of the most consequential unresolved issues in American small business capital formation. Under current law, there is no clear federal safe harbor for individuals who connect early-stage companies with accredited investors and receive compensation for doing so. The SEC proposed one in October 2020. That proposal lapsed without adoption. The market has been waiting ever since.
The practical consequences of that wait are real. Startups and small businesses need investor introductions. Registered broker-dealers are largely unwilling to serve them at the deal sizes and fee levels that early-stage capital raises involve. The gap is filled, in practice, by informal networks of former colleagues, industry contacts, and community leaders who know both entrepreneurs and investors and are willing to make introductions. These individuals are not financial professionals. They are participants in the entrepreneurial ecosystem. And they operate today without any clear legal framework telling them when their assistance becomes actionable broker conduct under federal law.
The cost of that uncertainty is not distributed equally. It falls hardest on founders who lack the inherited social networks that function, invisibly and without regulation, as informal finders for better-connected entrepreneurs. The college friend who mentions a startup to a family office contact over dinner is not a broker. The former colleague who sends an introductory email to an angel investor is not a broker. These introductions are common and entirely lawful, because they never involve transaction-based compensation. But the founder who lacks those connections, and needs to compensate someone for making them, faces a regulatory framework that provides no clear path to compliance short of full FINRA broker-dealer registration. That is a structural barrier. It is regressive. And it is fixable.
What the Petition Argues
The petition makes nine distinct arguments, organized as follows. It documents the legal gray area created by the absence of a statutory or regulatory definition of "engaged in the business" under Section 3(a)(4) of the Exchange Act, and the inadequacy of the Paul Anka no-action letter as a general safe harbor after three decades of reliance. It argues the capital formation imperative directly, drawing on the Commission's own acknowledgment in the 2020 Proposal that registered broker-dealers are unwilling to serve the small issuer market. It addresses and refutes the objection that a finder exemption would cannibalize the broker-dealer registration regime, demonstrating that finders and broker-dealers serve categorically different markets and that no registered broker-dealer is displaced by a relational introduction. It develops the equity argument in full, explaining how the absence of a finder exemption perpetuates a structural advantage for founders born into established social networks at the expense of women founders, founders of color, first-generation entrepreneurs, and founders from outside the established financial centers of New York and Silicon Valley.
The petition also analyzes the strengths and limitations of the 2020 Proposal, argues that Congress's enactment of the M&A Broker statutory exemption in the Consolidated Appropriations Act of 2023 provides direct precedent for the relief requested, and proposes a concrete regulatory framework as a starting point for the Commission's notice-and-comment process.
The framework this firm proposes includes availability to both natural persons and entities, a pre-existing relationship requirement, a prohibition on handling investor funds, mandatory written agreements, bad actor disqualification, and a blanket safe harbor for offerings at or below five million dollars. It also recommends extending the exemption to introductions made to Qualified Eligible Persons as defined by the CFTC, a category of investor whose sophistication and resources exceed even the accredited investor standard.
The Timing
Commissioner Hester M. Peirce raised precisely the right questions at the Small Business Capital Formation Advisory Committee's July 22, 2025 session, asking whether the 2020 Proposal remains a sound starting point, whether market practices have evolved to warrant adjustments, and whether a full rulemaking process is the appropriate vehicle for durable relief. This petition answers all three questions in the affirmative and urges the Commission to act promptly. An exemptive order, the vehicle used in the 2020 Proposal, proved insufficiently durable. Only a final rule produced through full notice-and-comment rulemaking will provide the legal certainty the private capital markets require.
This firm has been engaged with this issue in print since August 2024, when we published Finders vs. Brokers: Navigating SEC Compliance in Early-Stage Fundraising, and returned to it in July 2025 following Commissioner Peirce's remarks in SEC Finders Exemption Revisited: Clarifying Rules to Improve Capital Formation for Investors and Businesses. Today's petition is the next step in that engagement, and we intend to participate actively in any public comment process the Commission initiates.
[Download the Full Petition (PDF)]
NB: This article is provided for informational purposes only and does not constitute legal advice or establish an attorney-client relationship.