Introducing investors to deals can become illegal broker activity if you're doing it repeatedly, getting paid a percentage when deals close, and lack a FINRA license. Investors brought in by an unregistered broker can demand their money back plus interest, even if the deal performed well.
You've got a guy, he knows investors, he makes introductions. You pay him 1% of whatever they wire. I need to tell you what the SEC calls that under federal securities law. 3 things turn this arrangement into brokerage activity. One, the person is helping you find investors, making introductions, introductions, bringing people to the table. 2, They're paid based on whether the investment closes and how much comes in. 3, it's happening more than once— multiple investors, multiple deals. If all 3 are present, it's broker-dealer activity, and if that person doesn't hold a FINRA broker-dealer license, it's an unregistered broker violation under Section 15 of the Exchange Act. Now here's the part that matters to you as the issuer. When an unregistered broker brings in investors, those investors have the right to rescind. They can demand their money back, principal plus interest, regardless of whether the deal is performing. How they got in was unlawful. That's enough. The full breakdown, including what a compliant structure actually looks like, is in the long-form video. Link in the bio.
