Private Lender/Joint Venture Structures?

[Jean Norton]

I came across someone that raises money for a deal, offering 50% of the profits to the cash investor. However, if there is a loss, it is the cash investor that absorbs the loss.

Frankly, I think that's a hard sell, "Invest in my project and if I screw up, you take the loss". But in the discussion, this person said that's why they give 50% of the profit to the investor for doing nothing.

Does this violate any SEC rules? Getting money from unaccredited investors expecting them to take the loss?

What do you think is the most common form of deal structuring with private investors? I usually offer 50% and share profits and losses equally (although I've been known to pay the investor back in full and take the loss on myself).