Investor Choice Advocates Network (ICAN) co-founder Nicolas Morgan and board member Dara Albright recently spoke with newly appointed ICAN Senior Legal Director and Policy Counsel Mark Hiraide, who shared insights on securities regulation reform, the JOBS Act, and potential legislation that could expand capital access for entrepreneurs and investors.
A Veteran in Securities Law
Hiraide, who joined ICAN earlier this month while maintaining his partnership at Mitchell Silberberg & Knupp LLP, brings over three decades of securities law expertise to the organization. His background includes significant service at the Securities and Exchange Commission (SEC), where he worked as a Branch Chief in the Division of Enforcement and as an Attorney-Advisor in the Division of Corporation Finance in Washington, DC.
“I started out early in my career after working for a law firm for a couple years, joining the staff of the LA Regional Office enforcement staff where I did enforcement work for two years,” Hiraide explained during the interview.
He later moved to the Division of Corporation Finance in 1990, where he spent about four years before returning to Los Angeles to focus on representing startup companies.
JOBS Act Pioneer
Hiraide’s role in shaping modern securities regulation is particularly notable through his involvement with the Jumpstart Our Business Startups (JOBS) Act.
During the interview, he recounted how congressional staffers reached out to practitioners “in the trenches” as the legislation was being developed.
“I hadn’t even heard of crowdfunding,” Hiraide admitted, “but as a result of those interactions, eventually I was asked to testify about investor risks associated with the JOBS Act.”
His testimony before the U.S. Senate Banking Committee’s Securities Subcommittee provided valuable perspective on balancing innovation with investor protection.
Hiraide described the JOBS Act as transformational, noting it “really changed dramatically the securities laws which hadn’t changed much in 90 years since 1933.”
According to Hiraide, the legislation “democratized capital access by removing largely the restrictions on general solicitation” that had been in place since the 1930s.
State-Level Advocacy
Beyond his federal policy work, Hiraide has been active in state-level legislation, having drafted California’s seed-stage equity crowdfunding law (AB 511), which was signed into law in 2022. This legislation was designed to coincide with federal crowdfunding provisions.
His dual experience in both enforcement and transactional work provides Hiraide with unique insights into regulatory reform needs. As Morgan noted during the interview, this background “gives you great insight into some of the developments and the areas that need reform.”
Current Legislative Opportunities
Hiraide expressed optimism about pending securities legislation, comparing the current moment to the period leading up to the JOBS Act: “I haven’t seen activity like this since the JOBS Act in 2012.”
He highlighted several specific areas ripe for reform:
Finders Exemption
One significant issue Hiraide discussed is the “finders” problem—individuals who introduce entrepreneurs to capital sources. Currently, receiving transaction-based compensation (commissions) for such introductions typically requires broker-dealer registration.
“The finder issue is an important one for startups,” Hiraide explained, especially for entrepreneurs without wealthy connections. “Unless you ran around with your parents, had members of a country club, or had wealthy relatives, it was difficult to access capital.”
A bill pending before the House Financial Services Committee would create an exemption from broker-dealer registration requirements for finders who limit their activities to introductions without engaging in broader investment banking activities.
Regulation A+ Expansion
Hiraide also discussed proposals to enhance Regulation A+, which was revitalized by the JOBS Act.
Current legislation proposes increasing the offering size limit from $75 million to $150 million, which would support smaller-cap initial public offerings (IPOs).
Additionally, there are proposals to preempt state “blue sky” laws for secondary transactions of Reg A+ securities.
As Hiraide explained, while the SEC preempted state laws for initial offerings, they did not do so for secondary transactions, limiting the development of robust secondary markets.
Blurring Public and Private Markets
A particularly interesting observation from Hiraide concerns how the JOBS Act has blurred traditional distinctions between public and private markets. “With the JOBS Act and Rule 506(c), you have the ability to conduct an unregistered Regulation D offering publicly as long as you limit it to accredited investors,” he noted.
However, he emphasized that significant differences remain in secondary market access, highlighting the importance of expanding the accredited investor definition—a reform ICAN has been promoting.
Looking Forward
As Hiraide takes on his new role at ICAN, the organization will be closely monitoring these legislative developments and potentially working to build coalitions similar to those that helped pass the JOBS Act.
With Congress seemingly recognizing the value of building on the JOBS Act’s success and addressing issues that have emerged in its implementation, Hiraide expressed hope that “we’ll get some significant meaningful reform” with bipartisan support.
For entrepreneurs and investors interested in expanding capital markets access, these potential reforms represent important developments to watch in the coming months.
Nick Morgan is President and Founder of ICAN, the Investor Choice Advocates Network, a nonprofit public interest litigation organization dedicated to serving as a legal advocate and voice for everyday investors and entrepreneurs. He was previously a partner in the Investigations and White Collar Defense Group at Paul Hastings law firm. Morgan previously served as Senior Trial Counsel in the SEC’s Division of Enforcement. Capital Ideas is a series created by Morgan and Dara Albright.