What’s the real risk behind accepting investor referrals—and what could cost you hundreds of thousands without you realizing it?

In this episode, Dugan Kelley clarifies the rules around raising capital under the 506(b) exemption. He breaks down what counts as general solicitation, when a preexisting relationship is required, and how word-of-mouth referrals can create unexpected liability. They also address growing confusion around registered broker-dealers, finder’s fees, email marketing boundaries, and the future of accreditation rules. If you’ve ever questioned how to stay compliant in your real estate syndication or capital raise, this conversation gives practical guidance to protect yourself and your investors.

[00:01 - 05:49] The Broker-Dealer Dilemma

• Why only registered broker-dealers can legally accept commissions
• What most people misunderstand about co-sponsors and cap-raising roles
• The importance of avoiding unnecessary regulatory exposure

[05:50 - 09:35] The Truth About 506(b) & Referrals

• Why preexisting relationships matter—but aren't always required
• What the SEC actually says about general solicitation
• The significance of documentation in defending your offering

[09:36 - 13:25] Finders, Word of Mouth, and the “Paul Anka Rule”

• What the limited finder’s exemption really allows
• The importance of avoiding indirect solicitation
• Why most operators avoid referral-based models

[13:24 - 17:23] Email Lists, Accreditation Rules & SEC Trends

• When it’s safe to email your list about deals
• The unlikely future of a $10 million net worth accreditation rule
• The importance of understanding the SEC’s slow pace of change

[17:24 - 22:44] When to Move from 506(b) to 506(c)

• Why most operators stick with 506(b) early on
• What to consider when transitioning to 506(c)
• The importance of knowing your investor base

Connect with Dugan:

LinkedIn: https://www.linkedin.com/in/dugan-kelley-0019b435/

Key Quotes:

“There is no such thing as a professional referral unless the professional is a registered broker-dealer.” -Dugan Kelley

“You have the burden to prove you didn’t solicit someone—even if they were referred to you.” - Dugan Kelley

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