Florida Rep. Moves to Shield Traders From SEC Overreach

Congressman Byron Donalds introduces bill to protect private investors from regulatory reclassification

Apr. 16, 2026 at 9:34pm

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A vibrant, abstract painting composed of overlapping, geometric shapes in shades of navy, teal, and gold, representing a private investor in motion.The Defining Dealer Act seeks to shield private investors from regulatory reclassification, ensuring they can continue providing capital to small public companies.Today in Tampa

Congressman Byron Donalds (R-FL) has introduced a new bill called the 'Defining Dealer Act' that aims to amend the Securities Exchange Act of 1934 and prevent the federal government, specifically the Securities and Exchange Commission (SEC), from reclassifying private investors as professional dealers. The legislation seeks to codify the traditional definition of a dealer as 'any person buying and selling securities for customers' to stop recent SEC enforcement actions that have targeted professional investors and micro-cap lenders.

Why it matters

The bill is a direct challenge to recent regulatory shifts by the SEC under the Biden administration, which critics say have taken an overly broad interpretation of financial laws. Supporters argue the regulatory ambiguity has chilled investment in smaller markets, as investors are unsure where the line is drawn between being considered a private trader versus a regulated dealer.

The details

Donalds' bill would effectively end the 'grey area' that has allowed regulators to treat high-frequency private trading as a brokerage business. Supporters say this move is essential for the survival of micro-cap companies that rely on private lenders rather than traditional bank loans. The legislation has gained traction among advocacy groups who argue the SEC's recent stance ignores decades of settled practice.

  • Congressman Donalds introduced the 'Defining Dealer Act' in April 2026.

The players

Congressman Byron Donalds

A Republican Congressman from Florida who introduced the 'Defining Dealer Act' to amend the Securities Exchange Act of 1934 and prevent the SEC from reclassifying private investors as professional dealers.

Marc Indeglia

President of the Small Public Company Coalition, who argued the SEC's recent stance ignored decades of settled practice and that the Defining Dealer Act would restore clarity, protect capital formation, and ensure the professional investment community can continue to serve small public companies.

Nick Morgan

President of the Investor Choice Advocates Network, who warned that the threat of being recast as a regulated business often forces investors to the sidelines, stating 'When investors can't tell where the line is, they stop investing.'

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What they’re saying

“It is no secret that the Biden administration deputized regulators to circumvent Congress and carry out their political agenda. Under then-Chairman Gensler, the SEC disregarded decades of securities law and tried to put the federal government in the middle of every transaction.”

— Congressman Byron Donalds

“The Defining Dealer Act restores clarity, protects capital formation, and ensures that the professional investment community can continue to serve the small public companies that depend on it.”

— Marc Indeglia, President of the Small Public Company Coalition

“When investors can't tell where the line is, they stop investing.”

— Nick Morgan, President of the Investor Choice Advocates Network

What’s next

If passed, the Defining Dealer Act would effectively end the statutory 'grey area' that has allowed regulators to treat high-frequency private trading as a brokerage business, a move supporters say is essential for the survival of micro-cap companies that rely on private lenders.

The takeaway

This bill represents a direct challenge by Congressman Donalds and his supporters to the SEC's recent regulatory actions, which they argue have overstepped the bounds of securities law and chilled investment in smaller markets. The legislation aims to restore clarity around the definition of a 'dealer' to protect private investors from being reclassified as professional traders.