In this instructional video, securities attorney Kim Lisa Taylor warns real‑estate syndicators that a seemingly innocuous LinkedIn post about a new deal can instantly turn a Rule 506(b) private placement into an illegal general solicitation. She explains that Rule 506(b) permits unlimited capital raising without SEC registration, but strictly forbids any public advertising or solicitation unless the investor already has a documented, pre‑existing substantive relationship (a suitability conversation) with the sponsor. Kim details how LinkedIn posts reach hundreds of connections, many of whom lack such a relationship, and how comments, shares, and the permanence of online content amplify the risk. She introduces the “Discovery Channel vs. Infomercial” framework to differentiate permissible educational content from prohibited deal‑specific promotion. The video outlines the two‑fold mistake of (1) making the public post and (2) accepting money from investors who responded to it without the required relationship, which can taint the entire offering, trigger rescission, and invite regulatory investigations. Finally, she offers concrete remediation steps—stop accepting funds, review posts, consult an attorney, and ensure future communications stay within educational bounds—while inviting viewers to schedule a consultation and subscribe for more guidance.
Chapters
2 days ago, you posted your new deal on LinkedIn. You mentioned the property is under contract. You talked about the projected returns. Maybe you even added, message me if you want to learn more. 800 connections saw it. A few commented. Someone shared it. I want to walk you through exactly what that post just did to your 506 offering, because most syndicators I talk to have no idea this is a problem until someone tells them. My name is Kim Lisa Taylor. I'm a securities attorney and the founder of Syndication Attorneys. I've been working with real estate syndicators on Reg D offerings for many years, and this particular mistake shows up constantly, not because syndicators are careless, but because the definition of solicitation is much broader than most people understand. Let me explain what Rule 506 actually is, because that's where this starts. Rule 506 is a federal exemption that allows you to raise unlimited capital from investors without registering your offering with the SEC. It's used in about 90% of all Reg D offerings. The reason it's so popular is that it's relatively flexible. You don't have hard limits on deal size. You can include up to 35 non-accredited but sophisticated investors, and the investors can self-certify. Whether they're accredited or sophisticated. The condition, the one condition you can't break is that you cannot use any form of general advertising or solicitation to find your investors. That's the rule. And the word solicitation is doing a lot of work there. Here's what solicitation means in the SEC's framework. It doesn't just mean running a paid ad. It doesn't just mean a sponsored post or a Google campaign. It means any communication directed at the public that could possibly be seen by someone who Doesn't already have a documented preexisting substantive relationship with you that mentions your offering or could lead someone to invest in it. A LinkedIn post to your 800 connections is public communication. Most of those 800 people have never had a substantive financial conversation with you. You haven't evaluated their investment experience. You haven't discussed whether they're accredited or sophisticated. You haven't documented any of that before this offering began. The moment one of those 800 people sees a post about your deal and could potentially respond to it, that's a general solicitation. In fact, even an ad that more than one person sees can be construed as a general solicitation. And just one act of general solicitation can taint the entire offering, not just for that person, for all investors in the deal. Let me be specific about what pre-existing substantive relationship means, because this is a concept that determines whether someone can legally receive information about your offering. Substantive— that means you had a real conversation in which you talked about the investor's investment experience and financial situation enough for you to evaluate whether they're accredited or sophisticated and for both of you to determine whether this type of investment is appropriate for them. The SEC calls this a suitability conversation. Pre-existing— that means the substantive relationship existed before your offering began. It's not sufficient to say, I met them at a conference where I was presenting the deal, or we connected on LinkedIn the day I posted my deal. The suitability conversation that starts the substantive relationship had to take place before the offering began and has to be documented. The SEC has been explicit that an exchange of forms doesn't establish this relationship. Connecting on LinkedIn doesn't establish it. Following each other on social media doesn't establish it. A live suitability conversation that has been documented and predates the offering, that's what establishes it. If someone in your 800 LinkedIn connections has never had that conversation with you, you don't have a preexisting substantive relationship. And that means your post reached them in a way that Rule 506 doesn't allow. Here's why LinkedIn specifically is so dangerous for Rule 506 syndicators. First, your posts reach everyone, including people you've never spoken to. Your network on LinkedIn is not your investor network. It's a professional network that includes former colleagues, people you met at events, perhaps one time, and people who connected with you years ago for unrelated reasons. Second, comments and shares extend the reach of a post beyond your direct network. When someone comments on your post, their connections see it. When someone shares it, their entire network sees it. You have no control who ends up reading information about your deal. Third, everything published on the internet is permanent. That post you made 18 months ago is still there. It's indexed. If your offering is ever reviewed by the SEC, by a state securities regulator, in the context of an investor dispute, that post is discoverable. Investigators search your name, the post comes up. I deleted it is not a meaningful defense. It was already there. It was already seen. 2 mistakes combined here to create the worst outcome, and both matter. The first mistake is making the post, the general solicitation itself. The second mistake is accepting an investment from someone who came through that channel without first having a documented preexisting substantive relationship. Together, these 2 mistakes create the most serious exposure. One act of solicitation is a problem. Accepting, accepting money as a result of it converts that problem into a compliance violation that affects every investor in the deal. Here's a useful way to think about what you can post publicly. I call it the Discovery Channel distinction. A documentary about the salmon population in the Pacific Northwest is educational content. It's not selling anything. You watch it, you learn something, you may or may not ever take action based on it. An infomercial for a kitchen gadget is a solicitation. It has a specific product, pricing, call to action, and it's designed to get you to make a purchase. Your public social media content about real estate investing can be the documentary. You can talk about market dynamics or how syndication deal structures work. You can talk about what investors should understand before evaluating a deal. Or about your experience as a professional in this space. That's educational, like the salmon documentary. What it can't conclude is details about a specific deal, specific returns, specific investment amounts, or any invitation to contact you about a specific investment opportunity. The more you go from general education to specific opportunity, you've crossed the documentary into the infomercial. What do you do if you've already made posts like the one I described at the beginning? If you haven't accepted any capital yet from people who saw those posts, stop, review what you've published, talk to a securities attorney before you accept any funds. If you've already accepted capital and you're raising under Rule 506, the question is whether the specific investors who came in have a documented preexisting substantive relationship with you, and whether that documentation predates the offering. That analysis is based on facts. The worst thing you can do is keep going and pretend the rules don't exist or that they somehow magically don't apply to you. That's called denial. People who ignore the rules put the entire investment at risk for themselves and for the other investors. Offerings that violate securities laws can be rescinded by investors, meaning you'll have to pay them back without deduction, or may be subject to a regulatory investigation by state or federal securities regulators. Offerings that comply with securities laws provide protection to the syndicator and to the investors. If you're concerned that you or one of your team members may have broken these rules, or if you just want to gain a better understanding of what you can do And what you can't publish going forward, book a consultation at syndicationattorneys.com/schedule. We'll take a look at your specific situation and offer some options to help keep you out of trouble and sleeping better at night. Subscribe for more content like this. We'll be posting a new video every week.
