Capital Raising Rules & Finder's Fees

By Liquid Leads USA · Updated October 10, 2026

What Rules Apply When You Raise Private Capital?

When you sell an interest in a business, fund or deal to passive investors, you're almost always selling a security. That includes LLC membership interests in a syndication, LP interests in a fund, shares in a startup and, often, promissory notes sold to multiple lenders. Every sale of securities must be registered with the SEC or qualify for an exemption. For private raises, the main exemptions are:

Rule 506 is by far the most used. It preempts state registration (states still require notice filings and fees), and there's no cap on the amount raised.

506(b) vs. 506(c): Which Should You Use?

Rule 506(b)

• No general solicitation or advertising. No public posts about the offering, no public webinars pitching it, no ads, and no cold-pitching the offering to strangers.
• You generally rely on a pre-existing, substantive relationship with each investor, meaning you know enough about their finances and sophistication to judge suitability, and the relationship existed before the offering.
• Investors can self-certify accredited status, as long as you reasonably believe them.
• Up to 35 non-accredited investors who are sophisticated, but they trigger extensive disclosure requirements.

Rule 506(c)

• General solicitation is allowed: ads, social media, public webinars, cold calls and emails about the offering.
• Every purchaser must be accredited, with no non-accredited investors.
• You must take reasonable steps to verify accredited status, such as reviewing tax returns, W-2s or account statements, or getting a written confirmation from a CPA, attorney, registered investment adviser or broker-dealer.
• In March 2025 SEC staff said a high minimum investment, at least $200,000 for individuals or $1 million for entities, plus written representations that the investor is accredited and isn't financing the investment, can be reasonable verification when the issuer has no contrary information.

Which fits? If you have a deep network and won't advertise, 506(b) is simpler for investors. If you want to market openly and reach new investors at scale, by phone, online or at events, 506(c) is built for that. Many sponsors who buy investor leads raise under 506(c) for exactly this reason.

Can You Raise Under 506(b) and 506(c) at the Same Time?

Not for the same offering. An offering is one or the other. You can switch an ongoing 506(b) offering to 506(c), and sales already made under 506(b) aren't affected, as long as you meet 506(c) requirements from then on. Going the other way is hard because once you've generally solicited, you can't credibly claim 506(b). Running two separate offerings at once raises integration questions under Rule 152, which sets out when two offerings are treated as one. This is a question for your attorney.

What Counts as General Solicitation?

The SEC looks at substance, not labels. Generally treated as solicitation: public website or social posts about a specific offering, ads, mass emails to people you don't know, public seminars promoting the deal, and cold calls pitching a specific offering to people with no pre-existing relationship.

Generally not solicitation: talking about your firm, track record and strategy without offering a specific security; communicating with people you already have a substantive relationship with; and certain limited "demo day" events under the 2020 amendments.

How Do Investor Leads Fit Within These Rules?

This is the question we hear most from sponsors buying leads. There are two common, compliant approaches:

Liquid Leads USA leads have been personally called and asked about liquidity, qualification and interest in investment opportunities. That pre-qualification helps you focus your time, but it doesn't replace your own accredited-investor verification at subscription, which is the issuer's responsibility.

Do I Need a License to Raise Capital?

It depends on whose capital you're raising and how you're paid.

• Raising for your own company or deal. Issuers generally don't need a broker-dealer license to sell their own securities. Officers, directors and employees can usually help under the Rule 3a4-1 safe harbor if they aren't paid commissions or transaction-based compensation, have other substantial duties, and aren't subject to disqualification.
• Raising for someone else for compensation. If you're "in the business of effecting transactions in securities for the account of others," you generally must be registered as a broker-dealer or associated with one under Section 15(a) of the Securities Exchange Act. Individuals typically hold a Series 7 (or Series 82 for private placements) plus state licensing such as the Series 63.
• Giving investment advice for pay. That's investment adviser territory, usually with a Series 65 and registration with the SEC or the state.

The biggest single signal regulators look at is transaction-based compensation: getting paid a percentage of the money raised or a fee that depends on whether an investment closes.

Can I Pay a Finder's Fee for Bringing in an Investor?

This is the most-asked question in capital raising, and the honest answer is: paying an unlicensed person a percentage of money raised is very risky.

• There is no general federal "finder" exemption. The SEC proposed one in October 2020, but it was never adopted.
• A narrow line of SEC guidance permits a pure introduction with no involvement in negotiation and no transaction-based pay, but the line is thin and fact-specific.
• A handful of states, such as Texas and Michigan, have their own finder registration rules with tight limits.
• The risk lands on you, the issuer, too. Investors brought in through an unregistered broker may gain rescission rights, meaning they can demand their money back, and regulators can bring enforcement actions. Many state regulators also scrutinize unregistered capital raisers.

Charging investors for introductions to startups or deals raises the same broker and adviser questions, from the other side. Don't do it without legal advice.

How Are Capital Raisers in Syndications Paid?

Real estate syndicators often bring in "capital raisers" in exchange for a share of the GP, such as asking for 25% of GP equity for raising the money. Regulators have warned that labeling someone a co-GP doesn't change the analysis if their real job is selling securities and their pay depends on how much they raise. To reduce risk, a co-GP should have genuine management responsibilities and authority, real risk and ongoing duties beyond the raise. Many sponsors avoid the issue by:

• Raising directly from their own investor relationships.
• Hiring a registered broker-dealer or working under one when outside sellers are needed.
• Paying employees salary rather than commission and staying within the Rule 3a4-1 safe harbor.
• Building their own investor pipeline with lead lists, so they're not dependent on outside raisers. Buying leads for a flat price is not compensation tied to investments.

Do You Legally Need a Private Placement Memorandum?

Regulation D doesn't require a PPM when you sell only to accredited investors. In practice nearly every serious sponsor uses one, because the antifraud rules still apply. You're liable for material misstatements and omissions, and a PPM is how you document what you disclosed. If you sell to any non-accredited investors under 506(b), detailed disclosure, including financial statements, is required.

What goes into a PPM?

• Summary of terms: amount, minimum, structure, preferred return, waterfall and fees.
• Business plan or property description, use of proceeds and projections with assumptions.
• Sponsor background, track record and conflicts of interest.
• Risk factors specific to the deal, market and structure.
• Tax considerations, subscription procedures and investor suitability standards.
• Exhibits: operating or partnership agreement, subscription agreement and investor questionnaire.

Can an LLC Raise Money, and What Filings Are Required?

Yes. LLCs raise money all the time by selling membership interests, which are usually securities when investors are passive. Typical filings for a Rule 506 offering:

• Form D with the SEC within 15 days after the first sale.
• State notice filings and fees in each state where investors live.
• Bad actor check under Rule 506(d): certain past violations by the issuer, its officers, promoters or paid solicitors disqualify the offering.

Some ask how to raise capital "without being subject to the SEC." If investors are passive and expect profits from your efforts, securities laws apply. Structures where every partner genuinely participates in management, or a single loan negotiated with one lender, may fall outside them. That's a legal judgment, not a workaround to plan around.

Can I Hire Someone to Raise Capital for My Company?

Yes, in a few compliant ways: hire employees paid by salary within the Rule 3a4-1 safe harbor; engage a registered broker-dealer or placement agent; or work with registered representatives. For funds, placement agents and capital introduction teams at prime brokers serve this role. What you should avoid is paying an unregistered person a commission on investments.

What Does a Compliant Raise Cost?

8 Compliance Mistakes That Sink Raises

1. Paying unlicensed finders a percentage of money raised.
2. Advertising a 506(b) offering on social media, a public webinar or a website.
3. Cold-pitching a 506(b) deal to strangers.
4. Relying on self-certification in a 506(c) raise without reasonable verification steps.
5. Missing the Form D deadline and state notice filings.
6. Skipping the bad actor check on officers, promoters and paid solicitors.
7. No PPM or a boilerplate one that doesn't describe this deal's real risks.
8. Ignoring telemarketing rules: Do Not Call scrubbing and consent for autodialed or AI-voice calls.

Once your structure is settled, read How to Find Accredited Investors and Investor Lead Lists & Databases to build your pipeline.