Remarks by Commissioner Peirce on Private Secondaries in Capital Markets

Good morning, and thank you all for attending today’s meeting. Welcome to the Committee’s new members. I appreciate the work of the Committee and the willingness of experts to share their views as panelists. I also appreciate the work of the Office of the Advocate for Small Business Capital Formation in supporting the Committee’s work.

I commend the Committee for its continued focus on finders and look forward to any recommendations the Committee develops. As I mentioned at the last meeting, current activity in this area is shaped by a muddled web of no-action letters that is out of step with practical realities. Last meeting’s discussion of status quo finder activity underscored that point. The absence of a finder’s framework does not deter bad actors. Good actors may unwittingly act as finders, or, if they are aware of the law’s unduly strict limitations, may observe from the sidelines rather than helping to match investors and companies. I appreciated your in-depth discussion of what sensible finders regulation could look like and your focus on how finders can help companies to raise money in amounts too small for brokers to bother with. You covered a lot of other territory as well, from essential disclosures for finder activity to AI agents. I hope today’s discussion will be equally interesting and constructive as you devise recommendations.

This afternoon, the committee will discuss an increasingly mainstream area of our capital markets, private secondaries. The growth of these markets, from $162 billion in total volume in 2024 to $240 billion in 2025, [1] makes today’s conversation timely. I would be interested in hearing what today’s panelists think is in store for the remainder of the year. Will the trend continue?

Some of the growth in private secondary markets may stem from an IPO market that, while showing some promising signs of activity, is still not where we would like it to be. Private market investors increasingly are able to turn to secondary markets to exit certain positions and re-allocate capital. While beneficial to investors looking for an exit, the flexibility provided by private market tools such as continuation vehicles diminishes the pressure on companies to IPO. [2] As I expect we will hear from our panelists today, secondary markets are developing to accommodate a wide range of demands that are met by liquidity providers that specialize in a range of transactions. If capital for companies and liquidity for investors and employees are available privately, why take on the burdens associated with being a public company? As this panel discusses the secondary markets, I would appreciate hearing to what degree activity in this space trades off with initial public offerings and what factors investors and issuers consider when deciding which path to pursue.

Though I am happy to see capital formation occur in either the private or public markets, I am aligned with Chairman Atkins’ goal of revitalizing IPOs. Our public markets have benefits that simply cannot be recreated privately. The Commission can do more to improve liquidity in our private markets, but public markets facilitate price discovery and retail access in ways that the private secondary markets cannot duplicate perfectly. One long-overdue change that the Commission staff recently made has allowed closed-end funds investing 15% or more of their assets in private funds to sell to non-accredited investors with no minimum investment amount. Has this change been apparent in the marketplace? What else could the Commission do to improve efficiency in and retail access to these markets?

Regardless of what we do to expand retail access to private markets, most retail investor portfolios are likely to be concentrated in the public markets. When companies remain private longer those public investors miss out on the opportunity to fully appreciate the growth of companies that in the past may have occurred after those companies went public. While I am heartened to see markets develop solutions to capital allocation problems, the rapid growth of the private secondary market signals the need for earnest efforts to enhance the palatability of our public markets. Thank you and have a productive meeting.