They have jurisdiction over companies with more than 500 shareholders, whether or not they are traded on any exchanges. This is to prevent abuses where companie

They have jurisdiction over companies with more than 500 shareholders, whether or not they are traded on any exchanges. This is to prevent abuses where companies effectively go public by selling stock widely but fail to register to avoid the public disclosure requirements. What the SEC is looking into is the current trend of forming an LLC to buy private shares on a secondary exchange and then selling ownership in the LLC. This allows the owners of the LLC to invest indirectly in the private company effectively increasing the number of shareholders over 500 but not currently triggering the public disclosure requirements. The SEC may move to count these LLC owners as shareholders of the target company.