Raising Capital in 2025 - Well XYZ Pays Me A Commission…
In the last week, two different people asked if they could get a commission for referring investors to our fund.
When I explained it’s illegal to pay a commission unless you're a licensed broker-dealer, both had the same response:
“Well XYZ pays me to do it for my syndication.”
Here’s the thing—just because someone’s doing it doesn’t make it legal. Paying unlicensed individuals for raising capital is a direct violation of SEC rules. There are no loopholes. Not through a “consulting agreement.” Not through “marketing fees.” And certainly not by calling it a “referral.”
The consequences? Many get away with it until they do not and then when they are in the crosshairs of the SEC, they typically do not just slap wrists. These violations can blow up your exemption, claw back investor money, and trigger criminal charges.
This isn't scare tactics. It’s reality. If someone’s paying you for raising money and you're not licensed, they’re exposing themselves—and you—to serious liability.
If you want to raise capital legally for your 506c, 506b, or other offering either:
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Be part of the management team with real duties beyond fundraising,
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Or go get your license.
Otherwise, you're gambling with your entire business.
Oh and for those that are a "co-gp" - definitely speak to an attorney to determine what your role is and if it qualifies.
- Chris Seveney
