From IRR projections to investor emails, one wrong move can put your exemption—and your reputation—at risk.
In late 2022, the SEC’s updated Marketing Rule officially went into effect, setting new standards for how investment advisers can communicate performance and projections. Since then, the agency has made it clear that they are taking this seriously—shifting from policy to aggressive enforcement. In 2023, they fined nine firms a combined $850,000 for violations, and in 2024 the fines have continued to roll in, with several fund managers facing six-figure penalties for presenting hypothetical returns without proper disclosures, policies, or documentation. Several private fund managers have paid six-figure penalties for presenting hypothetical returns without proper disclosures, policies, or documentation.
While these actions targeted registered investment advisers (RIAs), the behaviors being penalized are commonplace in the real estate syndication world: performance projections, general solicitation, and casual investor communication.
If you’re a General Partner (GP) raising capital—especially under Rule 506(c)—this is something you should be paying close attention to right now.
So, Are GPs Really at Risk?
Technically, the recent SEC fines weren’t issued to traditional real estate GPs. But here’s why that doesn’t mean you’re in the clear:
The SEC has made it clear: these marketing standards are becoming the baseline for all private capital advertising—especially when general solicitation or performance claims are involved.
Most GPs raising under Rule 506(b) can’t advertise publicly at all. And those using Rule 506(c) must verify that every investor is accredited and avoid misleading or broad claims.
Even if you’re not an RIA, if you:
- Share projected IRRs or equity multiples online or via email,
- Market your deal on social media or share it broadly with people you don’t know,
- Use target returns in your OM without clear disclosures,
…you are mirroring the exact behaviors that the SEC is actively penalizing.
In short: they haven’t fined a GP yet—but they’ve drawn a very clear map.
Recent Enforcement Highlights
| Date | Action | Penalty |
|---|---|---|
| Sept 2023 (2023-173) | 9 firms fined for distributing hypothetical returns to mass audiences | $850,000 total |
| Feb 2024 (IA-6646-S) | Penalty for misleading projections without compliance procedures | $150,000 |
| March 2024 (2024-46) | Firms sanctioned for non-compliant advertising practices | Not disclosed |
| May 2024 (2024-121) | Inadequate audience targeting + lack of performance disclaimers | $100,000+ |
| May 2024 (IA-6763-S) | Repeat violations in marketing performance claims | $100,000+ |
These aren’t technicalities. They’re examples of everyday marketing behaviors that GPs often take for granted.
Where GPs Are Most Exposed
| Common Action | Hidden Risk |
| Posting IRRs or equity multiples on LinkedIn | Triggers general solicitation rules; must verify every investor |
| Circulating your deal widely to people who may further share it without a clear relationship | Could be interpreted as using an unregistered broker-dealer |
| Emailing a deck to your list with performance projections | Could violate marketing rules without audience definition or disclosure |
| Relying on self-certification of accreditation | Not sufficient under 506(c); must take reasonable steps to verify |
What GPs Should Do Now
To protect your raise and your reputation, here are the minimum best practices:
- Know your exemption: If you’re using 506(b), no public marketing allowed. If 506(c), you must verify every investor.
- Add real disclosures: Clearly explain all assumptions, fees, risks, and limitations related to projected returns.
- Define your audience: Don’t blast deal info to broad email lists or unknown LPs.
- Keep records: Archive every version of your OM, email, deck, and supporting materials.
- Vet any third-party platforms: If they distribute or promote your deal, you may be on the hook for how they do it.
Why RECAP Takes This Seriously
At RECAP, we know that compliance isn’t just about protecting yourself from fines. It’s about building trust with LPs, protecting your exemption, and creating a professional fundraising experience.
It’s also about having the right systems in place—like properly storing every version of your materials. If the SEC ever comes knocking, the ability to produce archived emails, offering decks, and communication history isn’t just helpful—it can be a critical line of defense.
We’re building tools that help GPs:. It’s about building trust with LPs, protecting your exemption, and creating a professional fundraising experience.
We’re building tools that help GPs:
- Communicate with LPs compliantly
- Control and track offering distribution
- Collect required investor documents and signatures throughout the raise process
- Store all offering materials, emails, and records in a secure, compliance-minded way
- Present performance data with proper framing and disclaimers
Because raising capital should be smart, not risky.
This post is for informational purposes only and does not constitute legal advice. Please consult your securities counsel before marketing any private investment.