The Unrecognized Holder: How Stacked Special Purpose Vehicles Sold Pre-IPO Exposure That Issuers Never Agreed to Recognize—and What Institutional Investors Must Demand Before They Wire the Next Subscription

On June 12, 2026, SpaceX sold 555.6 million shares at $135 each, raised approximately $75 billion, and entered the public market at an implied valuation of roughly $1.75 trillion. It was the largest initial public offering ever completed.¹ The stock opened at $150, traded as high as $176.52, and closed its first session at $161.11, up 19.34% from the offering price.²

Somewhere underneath that transaction sat an investor who had wired money into a SpaceX vehicle in 2021 and who, on the morning of the listing, could not say how many shares he owned, what he had paid per share, or whether he would receive any shares at all. His sponsor had stopped answering his messages roughly a year earlier.³

He is not an outlier. On the eve of the listing, nearly a dozen vehicle managers and secondary-market participants told TechCrunch that investors in lower-tier vehicles might discover that they hold fewer shares than they believe, and in some cases none.⁴ Demand for allocations in the largest private companies had been so intense that investors in one vehicle routinely formed a second vehicle out of their interests, and investors in that vehicle formed a third. Structures four and five layers deep are now ordinary.⁴

The weeks since have made the question urgent rather than academic. SpaceX reached an intraday high of $225.64 on June 16, fell through its offering price on July 15, and by late July had lost roughly half its value from the June peak.⁵ Investors at the bottom of a stacked vehicle may not receive their shares for eight or nine months after the listing.⁴ They have watched that decline without the ability to sell, without the ability to hedge, and without knowing the size of the position they are watching.

This is a market that has been described, generously, as democratizing access. Buxton Helmsley reads it differently. What has been built over the past four years is a distribution channel that moves economic exposure to the most valuable private companies in the world while leaving the disclosure obligations, the transfer consents, the fee arithmetic, and the identity of the actual owner somewhere outside the investor’s view. The federal disclosure regime was not repealed to make this possible. It was routed around, using a counting rule the Commission adopted in 1965.

Buxton Helmsley has devoted much of its recent research to the quiet degradation of the market’s verification functions: the audit firms whose ownership now answers to private equity,⁶ the credit ratings that are issued but never published,⁷ the private-credit marks that no market ever tests,⁸ the reported distributions manufactured by continuation vehicles and net-asset-value borrowings,⁹ and the private-market products now being routed into American retirement accounts.¹⁰ This article addresses the layer beneath all of them. Before an investor can ask whether an asset is fairly valued, the investor must be able to establish that the asset is owned. In a growing share of pre-IPO transactions, that question cannot be answered.

The Counting Rule

Section 12(g) of the Securities Exchange Act of 1934 requires an issuer with total assets exceeding $10 million to register a class of equity securities, and thereafter to report publicly, once that class is held of record by 2,000 persons, or by 500 persons who are not accredited investors. Before the Jumpstart Our Business Startups Act of 2012, the trigger was 500 holders of record. Congress raised it and, in doing so, left untouched the far more consequential question of how a holder is counted.¹¹

That question is answered by Exchange Act Rule 12g5-1, which the Commission adopted in 1965 to define the statutory phrase. Paragraph (a)(2) provides that securities identified as held of record by a corporation, a partnership, a trust, or another organization are counted as held by one person.¹² A vehicle holding shares for four hundred investors is one holder. A vehicle holding shares for four hundred vehicles, each holding shares for four hundred investors, is also one holder.

The consequence is structural rather than incidental. Section 12(g) was designed to force disclosure once ownership became broad enough that the public interest in transparency outweighed the burden of reporting. The special purpose vehicle severs the relationship between economic ownership and record ownership. A company can now be beneficially owned, in the ordinary sense of the word, by tens of thousands of people while appearing on its own stock ledger to be owned by a few hundred. It never registers. It never files. Its financial statements never become public. Its holders never receive a proxy statement.

None of this escaped notice. Congress, in Section 504 of the JOBS Act, directed the Commission to examine whether it needed new tools to enforce the anti-evasion provision of Rule 12g5-1, which provides that where an issuer knows or has reason to know that the form in which securities are held of record is used primarily to circumvent Section 12(g) or Section 15(d), the beneficial owners are deemed to be the record owners.¹² The staff of the Division of Corporation Finance delivered its report on October 15, 2012. The report identified the precise structure at issue, describing concerns raised about special purpose vehicles established to pool investor funds and purchase shares of companies that had not yet gone public. It observed that the provision had been invoked sparingly and that little interpretive precedent existed. It concluded that the Commission’s existing tools were adequate and that the staff had no legislative recommendations to make.¹³

Two features of that analysis explain why the provision has produced nothing in the fourteen years since. The first is that the staff read the phrase “primarily to circumvent” narrowly. Where a vehicle serves other purposes—avoiding rights of first refusal, earning fees, providing a service to clients, structuring for tax or liability—the Commission would have to establish that circumvention was a primary purpose rather than an ancillary effect. The staff further concluded that the element would not ordinarily be satisfied without some involvement by the issuer, an insider, or a controlling stockholder.¹³ Vehicles assembled by market participants acting on their own account therefore sit largely outside the rule. The second is that a separate provision, Rule 12g5-1(b)(1), does look through arrangements that shareholders form without issuer involvement, but it reaches only voting trusts, deposit agreements, and similar arrangements.¹² The single appellate decision construing the anti-evasion provision, Tankersley v. Albright, turned on exactly that distinction, holding that an employee trust holding a majority of the Tribune Company’s stock was not a voting trust and had not been created to avoid counting its beneficiaries.¹⁴

The tools exist. The Commission told Congress in 2012 that it did not need better ones. What has happened since is that the structure the report described has grown by orders of magnitude, and the reading of the rule the report adopted places most of that growth beyond its reach.

Why the Stack Exists

Layering is arithmetic.

A vehicle formed to hold the securities of a single operating company generally must find an exclusion from the definition of an investment company under the Investment Company Act of 1940. The exclusion nearly all of them rely upon is Section 3(c)(1), which is available to an issuer whose outstanding securities are beneficially owned by not more than one hundred persons, or by not more than 250 persons in the case of a qualifying venture capital fund, and which is not making a public offering.¹⁵ Congress created the 250-person category in 2018 and capped it at $10 million in aggregate capital contributions and uncalled committed capital, indexed for inflation; the Commission raised that figure to $12 million in August 2024.¹⁶ The alternative exclusion, Section 3(c)(7), requires that every owner be a qualified purchaser, a standard that generally means a natural person owning at least $5 million in investments, or an entity owning at least $25 million.¹⁵

One hundred slots is the binding constraint. When demand for an allocation exceeds one hundred investors—which, for the largest private companies over the past three years, it routinely has—the sponsor does not turn investors away. The sponsor forms another vehicle, gives it one of the hundred slots in the vehicle below, and fills the new vehicle with another hundred investors. Repeat the operation and a single slot on a cap table supports ten thousand economic owners.

The statute anticipated something like this and legislated against it only partially. Section 3(c)(1)(A) provides that beneficial ownership by a company is deemed ownership by one person, except that if the company owns ten percent or more of the outstanding voting securities of the issuer and is, or but for Section 3(c)(1) or Section 3(c)(7) would be, an investment company, then the beneficial ownership is deemed to be that of the holders of that company’s own securities.¹⁵ The look-through exists. Its threshold is ten percent. A vehicle that takes nine percent of the vehicle beneath it is counted once. Sponsors are aware of the number, and structures are built to respect it.

An institutional investor evaluating a pre-IPO vehicle should therefore treat the number of layers as a disclosed term, in the same category as the management fee. It determines how many parties stand between the subscription and the certificate, how many of them are paid, and how many separate legal entities must each perform before the investor receives anything.

The Toll Road

Each layer is a distinct legal entity, and each entity charges.

Forbes reported in May 2026 that upfront access fees on pre-IPO vehicles run from under five percent to as much as eighteen percent of the amount invested, and that those fees sit on top of the management fee and carried interest arrangements customary in venture capital, although not every vehicle charges a management fee. One large administrator disclosed that vehicles on its platform take an average of twelve percent of profits. The publication worked the arithmetic on a three-layer structure in which each layer charges two percent of assets and twenty percent of profits: an investor who commits $2 million and whose interest is worth $10 million at listing two years later would see close to $5 million absorbed by the intermediaries, before tax.¹⁷

The infrastructure supporting this has been capitalized accordingly. The same reporting recorded a vehicle administrator whose assets under administration moved from $3.5 billion to $5.5 billion in six months, with its chief executive expecting to reach $10 billion within a year; a formation platform estimated to have collected roughly $200 million in fees from vehicle creation; a secondary marketplace last valued at $650 million and projecting $120 million of revenue in 2026; and the acquisition of a New York vehicle broker by Morgan Stanley in January 2026. The chief executive of one marketplace estimated that vehicles hold hundreds of billions of dollars of private venture-backed company stock.¹⁸

Buxton Helmsley draws attention to a feature of this fee structure that is frequently misunderstood by allocators who are otherwise disciplined about expense. The fees are not merely additive. Carried interest at each layer is calculated on the appreciation measured at that layer, which means the upper vehicles pay carry on gains that have already been reduced by the carry charged below them. The investor at the bottom of a four-layer structure is paying a compounding series of claims against a single underlying position, and the effective cost cannot be recovered from any single subscription document, because no single subscription document describes the entire chain.

The Transfer That Was Never Approved

The graver defect concerns whether the transfer exists at all.

Shares of late-stage private companies are almost universally subject to contractual restrictions on transfer: rights of first refusal, co-sale rights, board consent requirements, and outright prohibitions on transfers to pooled vehicles. Delaware law permits such restrictions and requires only that they be noted conspicuously on the certificate or contained in the notice sent to holders of uncertificated shares.¹⁹ These are ordinary provisions in a stockholders agreement, and issuers have begun enforcing them with a vigor the secondary market did not anticipate.

Anthropic published a list of eight vehicle brokers that it identified as unauthorized to buy or sell its shares, stated that vehicles are not permitted to acquire its stock, and took the position that unauthorized transfers are void; one administrator was subsequently removed from the list. That administrator responded that it does not buy or sell securities because it acts only as an administrator, and one of the named marketplaces responded that it facilitates share transfers only with company approval and that its purpose is to bring transparency and standardization to the private market. The same reporting recorded that one of the named marketplaces appeared to hold more than a quarter of its vehicle assets, worth over $150 million, in Anthropic shares, and that the administrator had registered forty-four vehicles bearing Anthropic’s name.²⁰ OpenAI and Anduril likewise prohibit secondary transactions without express company approval, and in recent months Anthropic and Anduril have moved to disallow multi-layer structures altogether.⁴ ²⁰ Ahead of its listing, SpaceX removed vehicle investors from its cap table.²⁰

The implication should be stated plainly. An investor may hold an interest in a vehicle that holds an interest in a vehicle that holds a contractual claim against a shareholder whose purported transfer the issuer refuses to recognize. What the investor owns in that circumstance is an unsecured claim against a sponsor, enforceable only through litigation, subject to the sponsor’s solvency and to the sponsor’s willingness to answer correspondence.

The solicitation practices surrounding these transactions deserve comparable scrutiny. A New York venture investor described receiving an unsolicited message offering up to $2 billion of Anthropic stock at a valuation of $800 billion to $1 trillion, carrying a ten percent upfront fee, accompanied by a letter of intent to be signed and funded by the close of the same day. When he asked for the identity of the direct holder and evidence of the allocation, he received no answer, and he declined.²¹ A same-day funding deadline is a method for defeating diligence, and it should be read as one.

The Intermediary Who Is Not a Broker

Section 15(a) of the Exchange Act makes it unlawful for a broker to effect transactions in securities without registration.²² A person who solicits investors and receives compensation measured by the transaction is, on the ordinary understanding of the statute, a broker. The same New York investor estimated that half or more of the participants in this ecosystem are not registered broker-dealers.²³ Buxton Helmsley has no independent means of testing that estimate and offers it only as the assessment of a participant with direct exposure to the market. The enforcement record, however, is not ambiguous.

In December 2023, the Commission charged five unregistered brokers and four companies with fraudulent offerings of pre-IPO securities, alleging that they used a nationwide network of unregistered sales agents to raise at least $528 million from more than 4,000 investors worldwide, told those investors there were no upfront fees, and charged undisclosed markups reaching 150 percent, from which the defendants and their agents took more than $88 million.²⁴ In 2022 the Commission obtained emergency relief against StraightPath Venture Partners and related entities in a pre-IPO scheme, and charged sales agents the following year.²⁵ In June 2024 the Commission charged three New York residents in connection with pre-IPO schemes raising more than $184 million.²⁶ The Commission’s standing investor alert on the subject identifies unregistered sellers, boiler-room solicitation, social media promotion, and pitches tied to trending technologies including artificial intelligence as recurring markers, and warns specifically that promoters may claim there are no upfront fees while charging undisclosed markups.²⁷

The criminal record has now caught up. In January 2026, three vehicle brokers in New York City pleaded guilty to conspiracy and fraud charges arising from concealed markups on interests in pre-IPO vehicles, in a scheme that raised $185 million from more than a thousand investors. A month earlier, the Department of Justice charged a New York man with fraud for selling interests in Anduril shares to which he had no access. In 2023, a Manhattan man was convicted of using investors’ vehicle subscriptions to pay for private jet charters and an automobile.²⁸ The manager of one vehicle was sentenced to four years in prison for fabricating access to Anduril allocations that did not exist.⁴

A separate cautionary record belongs to Linqto, a platform that grew to manage more than half a billion dollars of pre-IPO assets and marketed access to more than a hundred private companies for minimum investments as low as $1,000, advertising the absence of management fees and carried interest. It became the subject of investigations by the Commission, the Department of Justice, and the Financial Industry Regulatory Authority. Allegations against prior management included telling investors they were purchasing shares directly while selling interests in a vehicle that was not properly formed, and charging undisclosed markups exceeding 150 percent while advertising the absence of hidden costs. New management placed the company into bankruptcy protection, moved customer assets to other custodians, and obtained approval of a plan of reorganization in February 2026. Its new chief executive characterized the prior business as having taken from the customer from the outset.²⁹

The Distribution Problem

For investors who do hold a valid interest, the listing began the process rather than concluding it.

SpaceX’s lock-up arrangements were structured to release over roughly four months. The first-layer vehicle has thirty days to distribute stock to its own investors once it obtains access. The vehicle below it therefore waits, and the vehicle below that waits longer. One investor who specializes in first-layer vehicles estimated that the final distribution to the bottom layer of a deep structure could take eight or nine months.⁴

Three consequences follow, and each is an unpriced risk that no subscription document quantifies.

The first is market exposure, and the SpaceX listing has now demonstrated it at scale. During the distribution interval, the investor holds an entitlement to a security whose price is public and moving. The investor cannot sell it, cannot hedge it without knowing the share count, and does not control the timing of the sale that will determine the realized price. An investor whose shares arrive in early 2027 will have held, through the entire round trip from $225.64 to below the offering price, a position of unknown size that he had no means to manage.⁵

The second is fee settlement. Fees and carried interest are frequently settled in shares. Where that occurs, the number of shares an investor receives is reduced by an amount that is not determinable until the sponsor performs the calculation, and investors in deeper structures have been told to expect that some of the shares they anticipated will be absorbed by fees taken at the layers above them.⁴

The third is information. Each participant in the chain communicates only with the layer immediately above. A sponsor acting in complete good faith may still transmit inaccurate expectations downward, because the sponsor is relying on representations from a party it cannot audit. The structural opacity is such that even careful sponsors may mislead without intending to.⁴ One secondary marketplace operator has stated publicly that he expects the lifting of the lock-ups to reveal vehicles that were fraudulent.⁴

The Timing Is Not Coincidental

This stress test has arrived as the regulatory posture moves in the opposite direction.

For more than two decades, the staff of the Division of Investment Management required registered closed-end funds investing fifteen percent or more of their assets in private funds to restrict their offerings to accredited investors and to impose a minimum initial investment of $25,000. The requirement appeared in no statute and no rule; it was applied through the registration statement review process, where a fund that declined to accept it would not be declared effective. Chairman Atkins announced the reversal of that position on May 19, 2025, and the Division published implementing disclosure guidance on August 15, 2025.³⁰

The Commission’s Spring 2026 regulatory agenda, released on July 7, 2026, includes an item titled “Enhancing Retail Exposure to Private Markets,” contemplating amendments under both the Advisers Act and the Investment Company Act to facilitate retail access to private markets through registered funds, together with items addressing accredited investor eligibility.³¹ Chairman Atkins, in his statement accompanying the agenda, framed the objective as extending participation in private markets beyond wealthy insiders while preserving appropriate safeguards.³²

The pipeline is filling at the same moment. Anthropic confidentially submitted a draft registration statement on June 1, 2026, following a financing round that valued it at $965 billion.³³ OpenAI announced its own confidential submission a week later, having last been valued at $852 billion.³⁴ Each of these companies has been the subject of vehicle formation on a scale comparable to SpaceX, and each restricts transfers. Whatever the SpaceX unwind reveals about the integrity of the layered vehicle market, it will be revealed again, at greater scale, within twelve months.

What Institutional Investors Must Demand

Buxton Helmsley does not regard pre-IPO vehicles as illegitimate. Single-layer vehicles sponsored by identifiable managers, holding shares acquired with the issuer’s written consent, administered by a third party, and audited annually, are a reasonable instrument. The defects described above are the product of a market in which nobody is required to disclose the things that matter most, and in which the parties who know those things are compensated for not volunteering them.

The remedy available to an institutional investor is the subscription agreement. The following should be treated as conditions precedent to funding, obtained in writing, before capital moves.

First, the full chain. The sponsor should identify, in writing, every entity between the subscription and the issuer’s stock ledger, including the name of the record holder appearing on that ledger. A sponsor who cannot name the record holder does not know what it is selling. A sponsor who declines to name the record holder is asking the investor to accept counterparty risk it has not been permitted to evaluate.

Second, the issuer’s consent. The sponsor should produce the issuer’s written approval of the transfer, or the written consent contemplated by the issuer’s stockholders agreement. Where the issuer has stated publicly that unauthorized transfers are void, the absence of that document is the entire analysis.

Third, the all-in cost, expressed as a single figure. The investor should require a written computation of total upfront fees, management fees, and carried interest across every layer, modeled at a stated exit valuation, and expressed both in dollars and as a percentage of gross proceeds. A three-layer structure at two and twenty is not a six percent annual fee. The sponsor should be required to say what it is.

Fourth, cost basis. The investor should require the date, the price, and the counterparty of the acquisition of the underlying shares, along with the resulting cost basis per share net of all fees at every layer. An entry valuation that cannot be stated is an entry valuation that has been marked up.

Fifth, registration status. The investor should confirm, through the Financial Industry Regulatory Authority’s BrokerCheck and the Commission’s Investment Adviser Public Disclosure database, the registration status of every person receiving transaction-based compensation in the chain, and should obtain written confirmation of who is being paid and on what basis. A person soliciting the investment for a fee, without registration, is a defect in the transaction rather than a curiosity about the counterparty.

Sixth, the Investment Company Act analysis. The investor should require the sponsor to state which exclusion each vehicle in the chain relies upon, how beneficial owners are counted at each level, and whether any vehicle owns ten percent or more of the voting securities of the vehicle below it. A sponsor that has not performed this analysis has not established that its own vehicle is lawfully unregistered.

Seventh, distribution mechanics. The investor should require the sponsor’s written allocation methodology, the treatment of fractional entitlements, whether fees will be settled in cash or in shares, the maximum period within which distribution will occur following the sponsor’s receipt of shares, and the extent of the sponsor’s discretion to sell rather than distribute. Where the sponsor retains discretion over timing, the investor should understand that it has purchased the sponsor’s judgment along with the underlying security.

Eighth, remedy. The investor should require an express representation that the transfer is valid and enforceable against the issuer, coupled with an indemnity and a rescission right that operate if the issuer declares the transfer void. A sponsor unwilling to stand behind the validity of the transfer it is selling has told the investor what it believes about that validity.

Ninth, for allocators and limited partners. Institutions with existing venture and growth commitments should ask their general partners, in writing, whether any portion of an allocation held for the institution’s benefit has been re-syndicated into vehicles sold to third parties, on what terms, and whether the manager or its affiliates received compensation for doing so. Fee income earned by a manager on the re-syndication of an allocation the institution helped fund is a conflict that belongs in the annual meeting materials, and it is rarely there.

Conclusion

The public disclosure regime rests on a premise that has quietly stopped holding. The premise is that once ownership of an enterprise becomes sufficiently dispersed, the public acquires an interest in seeing the enterprise’s financial statements, and the law compels their production. The threshold Congress selected was a count of holders. The counting rule the Commission wrote in 1965 tallies an entity as one person, and the market has spent the past decade demonstrating what can be built on top of that sentence.

The result is a class of companies among the most valuable in the world, financed in part by tens of thousands of people, none of whom receive an audited financial statement, a proxy statement, or a periodic report; many of whom cannot identify the entity that holds their shares; some of whom hold interests in transfers the issuer has declared void; and a meaningful number of whom purchased from persons who were required to register and did not.

None of this required a change in the law. It required only that nobody insist on the answers. The SpaceX unwind will supply, over the coming months, the first comprehensive audit this market has ever received, and it will be conducted by the investors at the bottom of the chain, one distribution notice at a time, against a share price that has already fallen by half. Two more offerings of comparable scale have draft registration statements under Commission review.

For institutional investors, the discipline is the same discipline that applies to any private security, applied earlier than usual. Establish who owns the asset. Establish that the owner is permitted to have transferred it. Establish what the transfer cost. Ask for those three things in writing before the wire goes out, and be prepared to decline when they are not produced. The sponsors who can answer will answer. The market’s exposure is concentrated almost entirely among the sponsors who cannot.

Referenced Sources:

[1] Forge Global, “SpaceX,” company profile (June 2026), reporting that SpaceX completed its initial public offering on June 12, 2026, listing on Nasdaq under the ticker SPCX, raising approximately $75 billion at an implied valuation of approximately $1.75 trillion, and citing TechCrunch for the company’s confirmation that it priced 555.6 million shares at $135 each.

[2] CNN Business, “SpaceX shares debut after biggest IPO in history” (June 12, 2026), reporting that the shares opened at $150, rose as high as $176.52, and closed at $161.11, a gain of 19.34 percent over the $135 offering price.

[3] Temkin, M., “SpaceX SPV investors won’t know their true holdings until post-IPO lock-ups lift,” TechCrunch (June 11, 2026), recounting a publicly posted account by the founder of a venture firm describing an investor who purchased SpaceX exposure through a two-layer vehicle in 2021 and had not heard from the sponsor for approximately one year.

[4] Temkin, M., supra note 3, reporting that nearly a dozen vehicle managers and secondary-market investors described the risk that lower-tier investors hold fewer shares than expected or none; that structures are sometimes stacked four or five layers deep; that Anthropic and Anduril have moved to disallow such structures; that SpaceX’s lock-ups were scheduled to release over approximately four months; that the first-layer vehicle has thirty days to distribute; that the bottom layer of a deep structure may wait eight or nine months, per the founder of Sabertooth Capital; that shares expected by lower-tier investors may be eroded by fees taken above them; that each participant communicates only with the layer above, such that even well-intentioned sponsors may inadvertently mislead their investors; that the manager of Sestante Capital was sentenced to four years in prison for fabricating access to Anduril allocations; and that the managing partner of Unicorns Exchange expects the lifting of lock-ups to reveal fraudulent vehicles.

[5] Yahoo Finance, “SpaceX stock hits all-time low, dips below IPO price” (July 15, 2026), reporting an all-time high of $225.64 on June 16, 2026, an intraday low of $132.75 on July 15, 2026, and a close that day of $135.27. See also StockCharts, “SpaceX Stock Is Down 50%. Time to Buy?” (late July 2026), and Yahoo Finance, “SpaceX stock got cut in half after joining an industry sell-off already underway” (August 2026), each reporting that the shares had lost approximately half their value from the June peak.

[6] Buxton Helmsley, “The Leveraged Opinion: How Private Equity Bought Its Way Into the Audit Profession—and What Institutional Investors Must Demand Before They Rely on the Next Clean Audit Report,” Insights (July 14, 2026).

[7] Buxton Helmsley, “The Unpublished Grade: How Private Letter Ratings Came to Certify Insurers’ Trillion-Dollar Private Credit Expansion—and What Institutional Investors Must Demand Before They Trust the Next Investment-Grade Label,” Insights (July 21, 2026).

[8] Buxton Helmsley, “Marks Without a Market: How the Saba Tender Offers Exposed the Architecture of Private Credit Valuations—and What Institutional Investors Must Now Demand,” Insights (April 29, 2026).

[9] Buxton Helmsley, “The Manufactured Exit: How Continuation Vehicles and NAV Loans Turned Private Equity’s Liquidity Drought Into Reported Distributions—and What Institutional Investors Must Demand Before They Sign the Next Election Form,” Insights (July 8, 2026).

[10] Buxton Helmsley, “Borrowed Liquidity: How Private Markets Are Reaching the American 401(k)—and What Plan Fiduciaries Must Demand Before They Sign the Next Investment Policy Statement,” Insights (May 15, 2026).

[11] Securities Exchange Act of 1934, Section 12(g)(1), 15 U.S.C. § 78l(g)(1). Jumpstart Our Business Startups Act, Pub. L. No. 112-106, 126 Stat. 306 (2012). Section 501 raised the holder-of-record threshold for issuers that are neither banks nor bank holding companies to either 2,000 persons held of record or 500 persons who are not accredited investors, and codified at $10 million the asset threshold the Commission had previously raised by rule from $1 million. Section 601 established a separate 2,000-person threshold for banks and bank holding companies. Section 502 amended Section 12(g)(5) to exclude securities held by persons who received them under an employee compensation plan in transactions exempt from Section 5 of the Securities Act, and Section 303 directed the exclusion of securities acquired in exempt crowdfunding offerings.

[12] 17 C.F.R. § 240.12g5-1, adopted in Adoption of Rules 12g5-1 and 12g5-2 Under the Securities Exchange Act of 1934, Release No. 34-7492 (Jan. 5, 1965) [30 FR 483]. Paragraph (a)(2) provides that securities identified as held of record by a corporation, a partnership, a trust whether or not the trustees are named, or other organization shall be included as so held by one person. Paragraph (b)(1) provides that securities held subject to a voting trust, deposit agreement, or similar arrangement shall be included as held of record by the holders of the certificates or evidences of interest. Paragraph (b)(3) provides that if the issuer knows or has reason to know that the form of holding securities of record is used primarily to circumvent the provisions of Section 12(g) or Section 15(d), the beneficial owners shall be deemed to be the record owners.

[13] Staff of the U.S. Securities and Exchange Commission, Division of Corporation Finance, Report on Authority to Enforce Exchange Act Rule 12g5-1 and Subsection (b)(3), as required by Section 504 of the Jumpstart Our Business Startups Act (October 15, 2012). The report identifies concerns raised regarding special purpose vehicles established to pool investor funds and purchase shares, typically from former employees and early investors, of companies that have not yet undertaken a public offering; observes that the anti-evasion provision has been invoked by the Commission or in private litigation sparingly, with little interpretive precedent; observes that where a form of holding also serves to avoid rights of first refusal or other transfer restrictions, to earn fees, to provide a service to clients, or for tax or liability structuring, the Commission would need to demonstrate that circumvention is a primary purpose rather than an ancillary effect; concludes that the “primarily to circumvent” element would not ordinarily be met without some involvement by the issuer, insiders, or controlling stockholders; and concludes that existing enforcement tools are adequate, with no legislative recommendations offered.

[14] Tankersley v. Albright, 514 F.2d 956 (7th Cir. 1974), discussed in the staff report, supra note 13, as the only court opinion of which the staff was aware interpreting Rule 12g5-1(b)(3).

[15] Investment Company Act of 1940, Sections 3(c)(1) and 3(c)(7), 15 U.S.C. § 80a-3(c)(1), (c)(7). Section 3(c)(1)(A) provides that beneficial ownership by a company shall be deemed beneficial ownership by one person, except that if the company owns ten percent or more of the outstanding voting securities of the issuer, and is or, but for the exception provided in Section 3(c)(1) or Section 3(c)(7), would be an investment company, the beneficial ownership shall be deemed to be that of the holders of such company’s outstanding securities. The qualified purchaser thresholds appear at Section 2(a)(51), 15 U.S.C. § 80a-2(a)(51).

[16] Economic Growth, Regulatory Relief, and Consumer Protection Act, Pub. L. No. 115-174, § 504, 132 Stat. 1362 (May 24, 2018), adding the qualifying venture capital fund category to Section 3(c)(1) and defining it as a venture capital fund with not more than $10,000,000 in aggregate capital contributions and uncalled committed capital, indexed for inflation every five years. The Commission adopted a final rule on August 21, 2024 adjusting the threshold to $12,000,000.

[17] Liu, P., “Inside The Murky Market Selling Pre-IPO SpaceX And OpenAI Shares,” Forbes (May 26, 2026), Daily Cover, June/July 2026 issue, reporting upfront access fees ranging from under five percent to as much as eighteen percent; the customary two-and-twenty arrangement in venture capital and the fact that not all vehicles charge management fees; one administrator’s disclosure that its vehicles take an average of twelve percent of profits; and the three-layer illustration in which approximately $5 million of a $10 million outcome is absorbed by intermediaries before tax.

[18] Liu, P., supra note 17, reporting the growth of one administrator from $3.5 billion to $5.5 billion of assets under administration in six months and its chief executive’s expectation of reaching $10 billion within a year; an estimate of approximately $200 million of fees collected by a formation platform; a marketplace last valued at $650 million and projecting $120 million of 2026 revenue; Morgan Stanley’s acquisition of a New York vehicle broker in January 2026; and the estimate by the chief executive of one marketplace that vehicles hold hundreds of billions of dollars of private venture-backed company stock.

[19] Delaware General Corporation Law, 8 Del. C. § 202, governing restrictions on the transfer of securities and requiring that such restrictions be noted conspicuously on the certificate or contained in the notice sent to holders of uncertificated shares.

[20] Liu, P., supra note 17, reporting Anthropic’s publication of a list of eight vehicle brokers identified as unauthorized, its position that vehicles may not acquire its stock and that unauthorized transfers are void, and the subsequent removal of one administrator from that list; the responses of the named marketplace and the named administrator, being respectively that transfers are facilitated only with company approval and in service of transparency and standardization, and that an administrator does not buy or sell securities; the observation that one named marketplace appeared to hold more than a quarter of its vehicle assets, worth over $150 million, in Anthropic shares, and that the administrator had registered forty-four vehicles bearing Anthropic’s name; the transfer restrictions maintained by OpenAI and Anduril; and SpaceX’s removal of vehicle investors from its cap table ahead of listing.

[21] Liu, P., supra note 17, recounting the unsolicited offer of up to $2 billion of Anthropic stock at a valuation of $800 billion to $1 trillion, carrying a ten percent upfront fee and a same-day signing and funding deadline, and the recipient’s decision to decline after receiving no answer to his request for the identity of the direct holder and evidence of the allocation.

[22] Securities Exchange Act of 1934, Section 15(a)(1), 15 U.S.C. § 78o(a)(1).

[23] Liu, P., supra note 17, quoting the same investor’s estimate that half or more of the participants in the ecosystem are not registered broker-dealers.

[24] U.S. Securities and Exchange Commission, “SEC Charges Five Unregistered Brokers, Four Companies in Widespread Pre-IPO Fraud Scheme,” Press Release No. 2023-245 (December 7, 2023), alleging that the defendants raised at least $528 million in unregistered offerings of pre-IPO securities from more than 4,000 investors worldwide, told investors there were no upfront fees, charged undisclosed markups reaching 150 percent, and, with their network of unregistered sales agents, took more than $88 million.

[25] U.S. Securities and Exchange Commission, “SEC Obtains Emergency Relief to Halt Pre-IPO Stock Fraud Scheme by Unregistered Broker-Dealer,” Press Release No. 2022-83 (May 16, 2022), concerning StraightPath Venture Partners LLC and related entities; see also “SEC Charges Three Sales Agents At StraightPath Venture Partners with Fraud and Unregistered Broker Activity,” Press Release No. 2023-61 (March 23, 2023).

[26] U.S. Securities and Exchange Commission, “SEC Charges Three New Yorkers for Raising More Than $184 Million Through Pre-IPO Fraud Schemes,” Press Release No. 2024-69 (June 7, 2024).

[27] U.S. Securities and Exchange Commission, Office of Investor Education and Advocacy, “Pre-IPO Investment Scams,” Investor Alert (June 7, 2024), identifying unregistered investment professionals, boiler-room and cold-calling sales practices, social media solicitations, and pitches tied to trending technologies including crypto assets and artificial intelligence as recurring red flags; warning that promoters may claim there are no upfront fees while charging exorbitant undisclosed markups; and noting that in some cases those offering pre-IPO shares do not own them.

[28] Liu, P., supra note 17, reporting the January 2026 guilty pleas of three New York vehicle brokers in a scheme raising $185 million from more than one thousand investors; the December 2025 charge against a New York man for selling interests in Anduril shares to which he lacked access; and the 2023 conviction of a Manhattan man for misappropriating vehicle subscriptions.

[29] Liu, P., supra note 17, recounting the history of Linqto, including its scale, its $1,000 minimums, its marketing of access to more than one hundred private companies without management fees or carried interest, the investigations by the Commission, the Department of Justice, and the Financial Industry Regulatory Authority, the allegations against prior management, the bankruptcy filing and transfer of customer assets, the February 2026 approval of its plan of reorganization, and its new chief executive’s characterization of the prior business.

[30] Atkins, P.S., Chairman, U.S. Securities and Exchange Commission, “Prepared Remarks Before SEC Speaks” (May 19, 2025), announcing that the staff position in place since 2002 would no longer be applied; see also U.S. Securities and Exchange Commission, Division of Investment Management, Accounting and Disclosure Information 2025-16, “Registered Closed-End Funds of Private Funds” (August 15, 2025). The prior position, which appeared in no statute or rule and was applied through the registration statement review process, required closed-end funds investing fifteen percent or more of their assets in private funds to restrict offerings to accredited investors and to require a minimum initial investment of $25,000.

[31] Office of Information and Regulatory Affairs, Spring 2026 Unified Agenda of Regulatory and Deregulatory Actions (released July 7, 2026), including the Securities and Exchange Commission item “Enhancing Retail Exposure to Private Markets,” contemplating amendments or new rules under the Investment Advisers Act of 1940 and the Investment Company Act of 1940 to facilitate retail investor access to private markets through registered funds, together with items addressing accredited investor eligibility and the simplification of exempt offerings.

[32] Atkins, P.S., Chairman, U.S. Securities and Exchange Commission, “Statement on the 2026 Regulatory Agenda” (July 7, 2026), describing a proposal to facilitate retail investor participation in private markets while preserving investor protection through appropriate safeguards.

[33] Anthropic, statement of June 1, 2026, confirming the confidential submission of a draft registration statement on Form S-1 to the U.S. Securities and Exchange Commission for a proposed initial public offering of common stock; see also CNBC, “Anthropic confidentially files IPO prospectus with SEC, prepping Wall Street for landmark AI deal” (June 1, 2026), reporting a financing round completed in late May 2026 at a post-money valuation of $965 billion.

[34] OpenAI, blog post of June 8, 2026, announcing the confidential submission of a draft registration statement for a proposed initial public offering; see also TechCrunch, “OpenAI files confidentially for IPO, following Anthropic” (June 8, 2026), noting a prior post-money valuation of $852 billion.

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