---
title: "2. Funding and paid introductions: classify before promising compensation"
slug: "regulatory-news-and-changes/2-funding-and-paid-introductions-classify-before-promising-c"
section: "Regulatory news and changes"
description: "The SEC lists finding investors, helping negotiate securities transactions and receiving transaction or size based compensation as indicators of broker act"
internal_only: false
---

# 2. Funding and paid introductions: classify before promising compensation

The SEC lists finding investors, helping negotiate securities transactions and receiving transaction- or size-based compensation as indicators of broker activity. A founder decision adviser analysing a term sheet is not automatically a broker, but an adviser who solicits investors for a success fee may cross a separate regulatory boundary. State securities law and particular transaction facts matter. [Broker-Dealers — US SEC](https://www.sec.gov/resources-small-businesses/capital-raising-building-blocks/broker-dealers)

**Contract screen:** Does anyone identify prospective investors, solicit, negotiate, receive funds, recommend investment securities, or get paid based on closing? If yes, pause for securities counsel. Separately, compensated advice about investing in securities can implicate investment-adviser regulation. [Investment Advisers — Investor.gov](https://www.investor.gov/introduction-investing/getting-started/working-investment-professional/investment-advisers)