Is Your Startup Fundraising Illegal? (A Lawyer Explains)

Episode 291 of the We Live to Build podcast, hosted by Sean Weisbrot, titled "Is Your Startup Fundraising Illegal? (A Lawyer Explains)" was published on February 24, 2026 and runs 25 minutes.

February 24, 2026 ·25m · We Live to Build

Summary

Are you unknowingly breaking the law by paying a commission to someone helping you raise capital? Wendy Culbertson, a securities lawyer, warns that many startup founders are violating SEC rules by paying "finders" who are not registered broker-dealers. In this interview, she explains the severe consequences of these illegal payouts, including civil and criminal liability. Wendy breaks down the complex world of SEC regulations, explaining the critical differences between Regulation D (506b vs 506c), Regulation A (Mini-IPO), and Crowdfunding (Reg CF). She also reveals the "safe harbor" strategies for hiring internal investor relations staff without triggering regulatory action and why founders should think twice before handling filings themselves. Check out the company: https://----------------------------------------------------------------------------------------------------------------------------📚 NETWORK BEFORE YOU NEED IT (6 LESSONS THAT MADE SEAN $15M)----------------------------------------------------------------------------------------------------------------------------▶ Get my eBook free - https://welivetobuild.com/network-----------------------------------📈 WORK WITH ME-----------------------------------▶ Buy 300 Lessons From 300 Founders: https://welivetobuild.com/300-lessons-ebook▶ Book a Paid Advisory Session: https://welivetobuild.com/book-a-call▶ Startup Fundraising: https://welivetobuild.com/fundraising▶ Sponsor the Channel: https://www.welivetobuild.com/sponsorship---------------------------------------------👀 CONNECT WITH SEAN---------------------------------------------▶ LinkedIn: https://linkedin.com/in/seanweisbrot▶ Inquiries: [email protected]🕒 CHAPTERS---------------------------00:00 - Why Many Founders Are Breaking Securities Law01:50 - The Danger of Paying "Finder's Fees"04:12 - What is a Broker-Dealer? (SEC Definition)07:05 - Safe Harbor: Hiring Employees to Raise Capital09:20 - Can You Pay Fundraisers with Equity?10:20 - Reg D vs. Reg A vs. Crowdfunding Explained15:00 - Why Reg D and Reg CF Are Named That Way18:50 - When Do You Need to File with the SEC?20:00 - "Blue Sky Laws": State-Level Compliance Nightmares23:30 - Should Founders File Their Own SEC Forms?24:35 - The Risks of Unregistered Broker-Dealers (Criminal Action)Leave a Review (it truly helps us grow): https://welivetobuild.com/reviewHow I Made $15M: https://welivetobuild.com/networkSubscribe on YouTube: https://youtube.com/@seanweisbrotFollow Sean on LinkedIn: https://linkedin.com/in/seanweisbrot Hosted on Acast. See acast.com/privacy for more information.

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