SEC Exemptions to Registration: A Syndication Attorney's Perspective

Understand the types of securities exemptions available for syndications and funds, focusing on Regulation D, Regulation A, and others. To get started with your syndication or fund visit https://www.moschettilaw.com

When investors put money into a company, syndication, or fund with the expectation of profits and minimal personal involvement, the investment is considered a security. Such securities must be registered with the SEC or qualify for an exemption. This description explores five key exemptions used by syndication attorneys to help clients legally raise funds.

Registration involves a public offering, requiring significant time and expense due to the SEC's rigorous review process aimed at protecting investors from fraud. In contrast, private offerings can leverage exemptions for more streamlined processes. The most prevalent exemption is Regulation D, particularly rules 506(b) and 506(c). Rule 506(b) allows unlimited fundraising from accredited investors and up to 35 non-accredited investors, without general solicitation. Rule 506(c), while restricting investments to accredited investors, permits general solicitation, necessitating third-party verification of accredited status.

Regulation D's Rule 504, less commonly used today, allows limited advertising but requires compliance with individual state blue sky laws, complicating the process. Another option is Regulation Crowdfunding (CF), enabling up to $5 million in fundraising through registered portals. These portals act as intermediaries to ensure regulatory compliance and investor protection.

Regulation A, akin to a public offering, has two tiers allowing non-accredited investor participation but involves extensive SEC review and significant costs, making it less attractive for smaller offerings.

Understanding these exemptions and their specific requirements is crucial for syndicators to select the best strategy for their fundraising needs. Ensuring compliance not only protects against legal pitfalls but also enhances the credibility and success of the investment offering.

YouTube Chapters:

0:00 - Introduction to Securities and Investments
0:34 - What is Registration?
1:49 - Private Offerings and Exemptions
2:16 - Regulation D Overview
2:51 - Rule 506(b) Explained
3:17 - Rule 506(c) Explained
4:09 - Regulation D Rule 504
5:01 - State Preemption in Regulation D
6:04 - Regulation Crowdfunding (CF)
7:23 - Regulation A Overview
8:52 - Challenges of Regulation A
9:14 - Section 147A Intrastate Offerings
10:16 - Section 4(a)(2) General Exemption
11:50 - Summary and Legal Support

Read more about the SEC and Reg D - The SEC And It’s Reg D: https://www.moschettilaw.com/sec-reg-d/

Read more about raising capital - Finding Investors for Real Estate Syndication and Private Equity Funds: https://www.moschettilaw.com/finding-...

Moschetti Syndication Law Group is a boutique syndication law firm, serving small and growth-bound syndicators, as well as private equity firms. Our attorney, Tilden Moschetti, is determined to keep the firm’s ‘boutique’ size so we can tailor the services to each client’s unique needs without turning the firm into a faceless factory churning out private placement memorandums or passing unnecessary overhead expenses onto our clients. (As our client, you’ll only pay a fixed fee, so no surprises.) As for the client experience, we give real-time answers with Tilden Moschetti without making you book an official appointment or get passed along to associates or paralegals. We’ll work with your ambitions and overall vision to help you close the current deal and fill in that ‘missing’ piece – whatever you need – to keep adding more syndications to your portfolio. We keep syndicators syndicating (TM).

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