Referral Programs, Finders Fees, and Interval Funds: How to Grow Without Triggering Broker-Dealer or Marketing Rule Landmines
Fintech founders love referral programs for the same reason regulators are skeptical of them: incentives work.
If you are offering an interval fund direct-to-consumer (especially on a “self-distributed” model), a well-designed incentive program can become your most efficient acquisition channel. The wrong program, or the right program implemented the wrong way, can create problems fast: unregistered broker activity, improper compensated solicitation, and RIA Marketing Rule violations, often all at once.
This article is meant to help you spot the issues early, frame the choices, and understand why “just pay people for referrals” is not a clean concept in the securities world. It is not a blueprint you can copy-paste into your business. The details matter, and the compliance architecture matters even more.
Why interval fund referral programs are uniquely tricky
An interval fund is a registered closed-end fund that generally does not trade on an exchange, continuously or periodically offers shares at NAV, and provides liquidity primarily through periodic repurchase offers rather than daily redemptions. Those repurchase offers are commonly quarterly, and the fund will typically repurchase only a limited percentage of outstanding shares per offer.
That structure creates two realities relevant to incentives:
Distribution and communications are central to the product. You are always in “offering mode,” which means a referral engine can look less like marketing and more like compensated selling activity.
Investors can misunderstand liquidity. In interval funds, the marketing risk is not just performance hype. It is also the practical mechanics of repurchases, pro rata limits, and how long capital may be tied up.
So if you are building a referral program around an interval fund, you are not just designing “growth.” You are designing regulated distribution behavior.
The three regulatory frameworks that collide in referral incentives
Most referral programs in this space get tangled because they implicate three overlapping buckets:
1) Broker-dealer registration and the “finders fee” problem (Exchange Act Section 15(a))
The SEC’s broker-dealer registration guide frames the core point simply: Section 15(a) generally makes it unlawful for a broker or dealer to use interstate means to effect transactions or induce purchases or sales of securities unless registered, subject to limited exceptions.
The guide also lays out the questions the SEC looks at when assessing whether someone is acting as a broker. Two of the biggest are:
Do you participate in important parts of a securities transaction (solicitation, negotiation, execution)?
Is your compensation tied to the outcome or size of the transaction (including trailing commissions or other transaction-related compensation)?
That is why “pay a percentage of AUM” or “pay only if the investor invests” is so radioactive. Even if the promoter thinks they are “just a finder,” the economics can look like sales compensation tied to a securities transaction.
Also worth stating clearly: private placement activity is not automatically exempt from broker-dealer registration. The SEC has explicitly noted that even if the underlying securities are sold under an exemption from Securities Act registration, the intermediary can still have broker-dealer registration obligations.
2) The Investment Adviser Marketing Rule (Rule 206(4)-1)
If an investment adviser (including an adviser to a fund) is using compensated promoters, testimonials, or endorsements, the analysis usually runs straight into the Marketing Rule.
The SEC’s small-entity compliance guide summarizes the key conditions for testimonials and endorsements:
Disclosure: clear and prominent disclosure of whether the promoter is a client and whether the promoter is compensated, plus additional disclosures regarding compensation and conflicts, subject to limited exceptions in certain circumstances.
Oversight and written agreement: advisers must oversee compliance, and must enter into a written agreement with promoters unless an exception applies (including affiliate promoters or de minimis compensation of $1,000 or less in the preceding 12 months).
Disqualification: certain “bad actors” cannot be compensated promoters, subject to exceptions where other disqualification regimes apply.
The SEC staff’s Marketing Compliance FAQs were updated on January 15, 2026, which matters because the staff’s views are evolving as they see more real-world marketing programs and exam fact patterns.
And the SEC Division of Examinations issued a December 16, 2025 risk alert highlighting compliance observations tied to disclosures, oversight, and third-party ratings under the Marketing Rule.
Translation: if you are paying people to promote your platform, your adviser brand, or your fund, you should assume the SEC expects a real compliance program, not just “marketing copy.”
3) Offering rules and general solicitation risk
Referral programs can also collide with how you are offering the product in the first place (registered offering versus exempt offering; retail versus accredited; what is being communicated publicly; what is being targeted).
Even when founders focus only on “finders fee regulations,” the marketing execution can drift into public-facing communications that create separate offering issues. The correct analysis depends heavily on the offering path, audience, and distribution model.
“But aren’t there finder exemptions?”
This is one of the most common misconceptions.
In October 2020, the SEC proposed a conditional exemption that would have created Tier I and Tier II “finders” for certain limited activities involving accredited investors, subject to specific conditions.
However, a critical point for 2026 planning is that the 2020 finders proposal was never adopted. Commissioner remarks in 2025 explicitly note the proposal was not finalized.
So, as a practical matter, you cannot build a business program assuming you can “fit into the SEC finder rule.” There is no finalized federal finder safe harbor you can simply claim. The analysis goes back to facts-and-circumstances under Section 15(a), plus any applicable state law overlays.
The growth-compliance design problem: what regulators care about
When you strip the terminology away, regulators focus on two questions:
Who is doing what?
A referral program is safer when the promoter’s role is limited to something like introductions and the promoter is not:
soliciting or persuading,
discussing investment merits, valuation, or suitability,
handling customer funds or paperwork,
negotiating anything,
holding themselves out as selling securities.
The more the promoter behaves like a salesperson, the more the program starts to look like broker activity.
How are they paid?
Compensation design is often the decisive factor.
Compensation tied to the size or success of a securities transaction is a classic red flag. The SEC’s broker-dealer guide explicitly calls out transaction-related compensation and involvement in the transaction process as key considerations.
On the adviser side, once compensation is involved and the activity is a testimonial or endorsement, you are in Marketing Rule territory, which brings disclosure, oversight, agreements, and disqualification diligence into scope.
A practical way to think about compliant referral program “lanes”
Most workable programs fit into one (or a combination) of these lanes:
Lane A: Brand marketing endorsements (Marketing Rule first)
This is the “influencer” or “ambassador” lane.
If you are paying someone to promote the adviser, the platform, or the fund in public content, you should assume:
you need promoter agreements (unless an exception applies),
you need compliant disclosures (compensation, conflicts, status),
you need monitoring and supervision,
you need documentation and recordkeeping that stands up in an exam.
This lane can work, but it is not lightweight.
Lane B: Lead generation (broker-dealer analysis first)
This is the “I will introduce you to people” lane.
If compensation is contingent on investments closing, or tied to dollars invested, or tied to transaction outcome, the risk of the promoter being viewed as acting as an unregistered broker increases materially.
Programs in this lane need careful boundaries around activities, compensation, scripts, training, and monitoring. Often, the cleanest solution is partnering with a registered broker-dealer where the facts call for it, rather than trying to engineer around the broker definition.
Lane C: Formal distribution through regulated channels (structure first)
For some models, the right answer is not “make the referral program clever.” The right answer is “make the distribution architecture correct.”
That can mean working with registered intermediaries, using the right agreements, and aligning compensation and supervision with the regulated framework that already exists for selling securities.
The best founders I work with treat this as a product decision, not merely a legal constraint.
Common mistakes that blow up otherwise good ideas
These show up over and over:
Paying per investment, per dollar invested, or paying “trails.” Transaction-linked comp is exactly what regulators focus on when evaluating broker activity.
Letting promoters “explain the fund” in their own words. That is how marketing becomes solicitation, and how compliance becomes unmanageable.
Social media endorsements with no real disclosures. The SEC has repeatedly emphasized disclosure and substantiation expectations in Marketing Rule exams and enforcement.
Assuming the “finder exemption” exists. It does not, at least not as a finalized SEC rule.
Treating compliance as a document instead of a system. The SEC’s December 2025 observations highlight oversight and compliance practices as recurring exam themes.
A short checklist before you build anything
If you can answer “yes” to any of these, slow down and get counsel involved early:
Are you paying anyone only if an investor invests?
Is comp tied to the amount invested or assets gathered?
Will the referrer talk about the investment’s merits, returns, or liquidity?
Will the referrer be communicating publicly about the adviser or fund?
Are you relying on “finders” instead of regulated distribution channels?
Do you lack a monitoring plan, disclosure templates, and documented supervision?
If your growth plan depends on this channel, this is the time to do it right. Rebuilding after the fact is always more expensive.
Final thought
You can absolutely build referral and incentive programs in the securities space. There is usually a compliant, commercially viable way to do it.
But you cannot responsibly implement a referral program for an interval fund or adviser platform using a generic blog post (even a really good one, like this one), a template agreement, or what “worked” for a non-regulated app. The right structure depends on the product, distribution model, audience, compensation mechanics, messaging, and the compliance infrastructure you are willing to operate.
If you are considering a referral program, finders fee structure, or compensated endorsement strategy for a fund, fintech, or registered investment adviser, talk to a securities lawyer before you ship it.
If you want to pressure-test an idea, sanity-check compensation design, or map a compliant program that still drives growth, you can reach me here: braeden.anderson@gesmer.com or (617) 531-8322 (direct)
Important legal notice
This article is for general informational purposes only and does not constitute legal advice. Reading it does not create an attorney-client relationship. Referral programs and distribution arrangements are highly fact-specific and can implicate federal and state securities laws, SEC rules, and other regulatory requirements. You should consult qualified counsel before implementing any strategy described here.
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About the author:
K. Braeden Anderson is a Partner at Gesmer Updegrove LLP, where he leads the firm’s Securities Enforcement & Investigations practice, and chairs Mackrell International’s Blockchain & Digital Assets Group and Securities Enforcement & Investigations Group. He is a nationally recognized securities regulatory and enforcement attorney whose practice sits at the intersection of traditional financial regulation and emerging technology. He has been recognized in Best Lawyers: Ones to Watch® in America (2025) for Financial Services Regulation Law and Securities Regulation, and was named the #1 most-read fintech thought leader in the United States in Mondaq’s Spring 2025 Thought Leadership Awards.
Before joining Gesmer Updegrove, Braeden founded a Washington, D.C.–based law firm. He previously served as Assistant General Counsel at Robinhood Markets, Inc. (NASDAQ: HOOD), advising on high-stakes regulatory and enforcement matters, and earlier practiced at Kirkland & Ellis LLP and Sidley Austin LLP in New York and Washington, D.C.
Braeden is a prominent voice in securities and crypto regulation and a leading example of how lawyers can build brand through education and content. He publishes a weekly newsletter reaching more than 20,000 legal and financial professionals, runs a YouTube channel with over 160,000 subscribers, and regularly produces written and multimedia thought leadership through his blog, Anderson Insights. His work focuses on enforcement trends, fintech regulation, and the evolving role of digital assets in capital markets.
