00:00
and i’m honored to welcome mauricio rauld
00:02
founder and ceo of premier law group a
00:05
law firm specializing in private
00:07
placements welcome mauricio thanks anton
00:10
thanks for having me it’s uh good to see
00:11
you and looking forward to it yeah it’s
00:13
a pleasure to have you on so why don’t
00:15
you give us a brief background about
00:18
yourself and your firm
00:21
boy well uh i am an attorney uh
00:23
unfortunately or uh or maybe not
00:25
unfortunately uh i’m not your typical
00:26
lawyer though most people you know anton
00:28
most people refer to me as the
00:29
anti-lawyer and
00:31
one of the few attorneys that actually
00:33
speaks english which is kind of my
00:34
little gift uh i have the ability to
00:36
sort of make complex matters simple but
00:38
yeah i’ve been doing securities work
00:40
for what is it now 22 years now um
00:44
started off at a at a large law firm
00:46
here in southern california and decided
00:48
that
00:49
that was not what i wanted to do but uh
00:51
got really cut my teeth there
00:52
representing some of the big brokerage
00:54
firms that you know well the goldman
00:56
sachs jp morgan’s merrill lynch’s
00:58
american expresses of the world um but i
01:00
was doing litigation so i was always
01:02
involved in lawsuits and it was not not
01:03
the nicest environment uh
01:05
and then luckily for me i’ll tell you
01:07
the quick story because uh luckily for
01:08
me i i came across the little purple
01:11
book which i know you’ve read and a lot
01:12
of people changed a lot of people’s
01:14
lives by robert kiyosaki rich dad poor
01:16
dad
01:17
that changed my life really and and that
01:19
really led me to
01:21
the realistic guys which is where i kind
01:22
of transitioned from the law firm went
01:24
to work uh in-house their general
01:26
counsel to for the realistic ads which
01:27
is where i really cut my teeth on
01:28
syndication so i did all the private
01:30
offerings over there uh which were a lot
01:32
back then and then i started my own firm
01:35
in 2006 or 2007 and um you know been
01:39
doing the private placements uh since
01:41
then and today
01:42
that’s all we do man uh we just bang out
01:45
uh ppms and uh primarily reg d offerings
01:48
so 506 b 506 cs we don’t really dabble
01:50
anymore in reggaes i kind of refer those
01:53
out but um
01:55
all we do is real estate syndications
01:56
and we do you know 120 130 150 a year
02:00
and um that’s where we we’re very niche
02:03
as you can see that’s all we do is the
02:04
real estate syndication work so yeah
02:06
happy to talk to you about uh
02:08
about about any of that today and uh
02:10
looking forward to it okay very good so
02:12
you touched uh briefly on reggae
02:16
what is the reason why you decided that
02:18
you would uh kind of refer that out
02:21
rather than
02:22
doing it yourself because most lawyers
02:24
say oh we can do that too right we can
02:27
do it it’s just a lot more it’s a lot
02:29
it’s a lot more work uh we just realized
02:31
that our our little niche and and what
02:33
we could really bring the most value to
02:35
was the reg d’s uh we did you know
02:37
probably three or four reggaes and it’s
02:39
it’s getting a little bit more and more
02:40
complicated with the fed so the
02:41
difference between just really quick
02:43
between a reggae and a reg d
02:45
is the reggae you have to register it so
02:48
it’s a little bit less we have a very
02:49
specific process let me just backtrack
02:51
maybe that we have a very specific
02:52
process that allows us to do a lot of
02:54
great things in the reg d space it’s one
02:57
of the reasons we do the really fast
02:59
turnaround speed we get things done
03:01
about a week which is almost unheard of
03:02
in the syndication world but the reason
03:04
we can do that is a very specific almost
03:06
strict process that we go through and
03:08
we’ve created over the last couple years
03:10
with the reg a there’s so many unknowns
03:12
because we we start the process very
03:14
similar to right d but instead of just
03:16
saying okay we’re done let’s let’s give
03:17
it to the investors we actually have to
03:19
submit it to the sec and there’s an
03:21
approval process and there’s a lot of
03:23
back and forth um you know things they
03:25
don’t like that we have to fix or they
03:27
want us to add and so it’s about a
03:28
six-month process where you’re
03:30
negotiating and going back with the
03:32
lawyers back and forth uh and so it’s
03:34
very difficult to build a very efficient
03:36
process around that because you’re at
03:37
the mercy of the attorney at the sec you
03:39
know government lawyers uh who may turn
03:41
around things really quickly or they may
03:42
take forever so it’s just hard for us to
03:44
get that process um and then you know
03:46
with the cost being so high as well you
03:48
know our clientele you know they don’t
03:50
want to spend 75 000 or whatever it is
03:52
going to be to do the legal work and all
03:54
the compliance work
03:56
um you know so so most people
03:58
most people do reg d’s anyway because
04:01
not many of us have the luxury of
04:02
waiting six to nine months to get uh you
04:04
know an offering done that you’ve got a
04:06
closing date in 60 or 90 days you don’t
04:08
have time to wait for the sec to approve
04:10
it so we made it’s just a recent
04:12
decision we made this decision uh i
04:13
think at the end of last year that we
04:15
weren’t doing a ton of them anyway and
04:17
so we just decided hey let’s just focus
04:18
on what we do best and can really serve
04:20
the clients the best which is reg d
04:22
and then you know we’ve got several
04:24
people that we can refer reggaes and and
04:27
i’m happy to do that yeah that’s great
04:29
right so again it’s all about expertise
04:32
in your niche right and uh
04:34
with your expertise again as you said to
04:37
turn around in one week that’s really
04:39
extremely fast right it’s not easy but
04:42
which we
04:44
but that’s what you know what
04:45
that’s there’s two things that people
04:47
always complain about you know when they
04:49
come to me from somewhere else it’s
04:51
number one is turnaround speed you know
04:53
you know some people just take two three
04:55
four and i’ve heard stories where it
04:56
just drags on for months and months and
04:58
you as a as a syndicator you don’t have
05:01
that time you know you’ve got a time is
05:02
money and you’ve got a closing and
05:04
you’ve got to get investors in the door
05:05
and you know you run the risk investors
05:07
have a lot of options these days and if
05:08
you don’t get them in quickly they might
05:10
go to the next guy or next the gal next
05:12
indication uh so that was a big thing
05:14
for me i noticed the turnaround speed
05:16
was a really something very important to
05:18
syndicators and then the other one was
05:19
just access to lawyers you know and i
05:21
experienced this with other lawyers and
05:23
cpas and other professionals where
05:24
you’re trying to get a hold of them and
05:26
it takes two or three days to even get a
05:28
response or you know you’re trying to
05:29
get a quick meeting and they’re just
05:30
busy for a week or whatever and so we
05:32
also turn that that around on its head
05:34
you know most clients you know text me
05:36
or my managing partner bethany we’re
05:38
texting constantly and we’re hopping on
05:40
calls uh but but i hate having to have
05:42
somebody shoot us an email with a
05:44
question enough for us to take two or
05:46
three days to respond or trying to get a
05:47
hold of us so access to lawyers and
05:49
turnaround speeds are big things for us
05:51
and uh and again it’s just based on
05:53
market feedback that’s just what i
05:54
recognize what what syndicators want um
05:58
and and we’ve kind of provided that for
05:59
them and it’s been working great because
06:01
of that yeah that’s that’s great to hear
06:04
and we see that right we we work with
06:06
with a lot of syndicators that
06:09
we use different type of lawyers and uh
06:12
that’s very often a challenge might get
06:14
get a
06:15
prompt turnaround and also once you are
06:18
in the process
06:20
to close that deal if you do not get
06:22
quick feedback even on just a lending
06:24
side right it can be
06:26
very problematic right so it’s
06:30
it’s good to hear that you you have the
06:32
process really
06:33
under control right and obviously the
06:35
more you do it the more comfortable you
06:38
are to speed up that process
06:40
what would you say between 506 bs and
06:43
c’s
06:44
what do you see have you seen a change
06:47
in trend
06:48
i know that a lot of people decided
06:50
initially it was mostly five or six ps
06:53
right and then the it moved kind of
06:55
towards five or six seas but we have
06:57
seen now more people going back to the
06:59
506 ps is that something but similar
07:02
what you see or do you see a different
07:04
trend
07:05
yeah i mean
07:06
nationally if you look at the statistics
07:08
that the sec puts out every couple years
07:10
or whatever um it’s it’s always been
07:13
pretty surprising to me that not many
07:15
people are doing 506 c’s i think
07:17
originally at some point
07:19
because like i talked about this at my
07:20
presentations it was about a 90 10
07:23
split nationally 90 were doing 506 b’s
07:26
and 10 we’re doing 506 between those two
07:29
and then recently i saw that number even
07:31
get more skewed it was like i think 93
07:34
to 7 or something like that it seems
07:35
like less and less people are doing 506
07:37
e’s now in my practice again i’ve got a
07:39
very niche practice i represent small
07:42
mom and pop investors indicators you
07:44
know the average raise that i do is
07:46
probably
07:47
two three four million dollars you know
07:48
every so often we’ll get a big raise of
07:50
eight
07:52
uh unlike a lot of these institutions
07:53
that are obviously raising hundreds of
07:55
millions if not billions of dollars um
07:57
and so i see a little bit more
07:58
willingness to do the 506 c’s um
08:01
i’m it’s going to be an estimate i don’t
08:03
have actual knowledge i keep telling
08:04
myself i should pull the actual numbers
08:06
but i’m going to say probably a third
08:08
of my deals are 506 c’s and then the
08:11
other two thirds are reg d’s i’m sorry
08:13
506 b’s um so we’re we’re getting there
08:16
and i think i would say that i’ve seen
08:18
as people got more comfortable with it
08:20
more and more 506c especially as and i
08:22
think it’s a natural progression you
08:24
know as you run out of your friends and
08:26
family and people in your circle
08:28
um the next
08:29
what i typically the next thing that
08:30
happens is you start trying to hit that
08:32
gray area of using advertising but
08:35
trying not to and then it gets into that
08:37
little gray area and then i think people
08:39
just realize hey look i’ve already run
08:41
out of all of my 506b investors they’re
08:43
kind of already in my deals and so let’s
08:45
let’s let’s try the advertising route
08:48
which you know these days with
08:50
with what you’re doing with podcasting
08:51
with social media whether it’s youtube
08:54
or facebook or instagram um and then
08:56
obviously the live you know meetups and
08:58
all that stuff
08:59
there really is an almost an unlimited
09:02
um traffic that you can you can tap into
09:04
and it’s just a question of being you
09:06
know good at it but um so i think 506 c
09:09
you know it’s definitely becoming more
09:11
and more relevant but but not again
09:12
mine’s a niche it’s not as as extensive
09:14
or as limited as it is in the national
09:17
where it’s right at 97 i think was the
09:19
last statistic i saw yeah yeah
09:22
i think also the 5060 provides kind of a
09:25
safety net right so you you know that
09:28
when you talk to someone that you’re
09:30
allowed to talk to them
09:33
and a lot of people i think
09:35
underestimate the the risk that you have
09:38
with the 506p right
09:41
yes you have your relationships yes you
09:43
think that you only tell
09:46
your pre-existing relationships about
09:49
that deal but it doesn’t take much until
09:52
you talk to someone you shouldn’t talk
09:53
about it yeah and that happens a lot i
09:55
mean you know you and i obviously we’re
09:56
in the in well before covet anyway we
09:58
were part of the sort of the circuit we
10:00
we always run into each other and it’s
10:02
amazing how many emails i will get from
10:05
you know attendees at those seminars
10:07
that i that i
10:08
i’m sure i met but i’m sure we just
10:10
exchanged cards i gave them my card as a
10:13
you know as an attorney looking looking
10:14
to make relationships there and then
10:16
they gave me their card as they’re
10:17
looking for passive investors
10:19
and then within a couple of weeks i’ll
10:20
get an email from them and just pitching
10:22
me their next deal and i’m like i don’t
10:23
know i don’t know this person from
10:25
anyone i don’t even remember them you
10:26
know you meet so many people and yet
10:28
they’re emailing already so they’re not
10:29
going through that process uh which is
10:32
you know time consuming and it’s it’s
10:34
not fun to go
10:35
you know somebody that you meet a
10:36
complete stranger at one of these events
10:38
or even on a facebook zoom or whatever
10:40
that you don’t really know
10:41
and put them through the six to seven
10:43
eight steps that are out there that the
10:45
sec has said you’ve got to take these
10:46
steps to then take them from a complete
10:48
stranger to somebody that you have a
10:50
substantive relationship with
10:52
um and most people don’t really do that
10:55
very well and they certainly don’t
10:57
document it so i think if any of these
10:59
not have any but a lot of these
11:00
syndicators you know something were to
11:02
go wrong in the future and an sec or a
11:05
state regulator were to ask them hey you
11:08
know
11:09
prove to me that you had a substantive
11:11
relationship because it is going to be
11:12
your burden to prove that they’re going
11:15
to have a hard time pulling up records
11:16
because most people don’t keep records
11:18
you know they don’t keep uh you know a
11:20
copy of the questionnaire for example
11:21
that they should be sending out they
11:22
don’t keep detailed notes of whatever
11:24
phone calls or meetings they had they
11:26
don’t have the you know they don’t have
11:27
the file built up so they can show to a
11:29
regulator hey here are all the things i
11:31
did back in you know five years ago that
11:34
that i felt was good enough for me to
11:36
establish that substantive relation to
11:37
get to know my
11:38
investor and then that’s why i offered
11:40
him a future deal so 506c i think is
11:42
safer
11:44
but you know you’re limited you can only
11:46
as you know you can only accept a credit
11:47
investor so that’s the first limitation
11:49
and
11:50
for some reason you know there’s a
11:52
verification requirement and for some
11:54
reason which i’m still not sure why but
11:55
a lot of a lot of investors passing
11:58
investors especially the high net worth
11:59
individuals are a little bit hesitant to
12:02
provide them with their financial
12:04
information even though they’re not
12:04
really giving it to them they’re using
12:06
third party verification companies so
12:08
the syndicator actually never sees their
12:09
financials
12:11
they still don’t quite understand and
12:12
and i guess if they’re looking at ten
12:14
different deals and
12:15
the other deals don’t require them to
12:17
submit financials then they’re they
12:18
might as well that’s kind of an edge
12:19
that you lose by doing a 506 c but yeah
12:23
i like it
12:26
yeah
12:27
so have you uh
12:29
have you seen some some new changes that
12:32
uh
12:32
that have come on the horizon obviously
12:34
last year it was quite a flurry of of
12:37
some of some new activity of changes of
12:41
rules that were proposed and
12:43
uh some of them are still in the
12:45
pipeline can you
12:46
tell us a little bit of what what has
12:49
passed what is still in the pipeline and
12:51
what you see might come or might not
12:54
come to fruition yeah i think that
12:56
there’s a lot as you mentioned there’s a
12:57
there was a lot of sec activity last
13:00
year and i don’t i don’t know if it was
13:01
because you know sort of the the
13:03
commissioner was on his last year and he
13:05
just wanted to kind of get stuff done or
13:07
you know with the potential change of
13:09
administration a lot of activity came
13:10
down the pipeline last year and probably
13:12
the most well-known
13:14
although maybe a little misunderstood
13:16
was the they finally got to at least
13:18
start the process of expanding
13:21
the definition of what an accredited
13:22
investor looks like ever since uh i
13:25
think since 1982 that this has come out
13:27
they’ve always tied accreditation with
13:30
financials right you have to be a high
13:32
net worth individual you know either a
13:34
million dollars a net worth you know
13:35
excluding your primary residence or
13:37
you’ve been earning a couple hundred
13:39
thousand dollars a year and expect to
13:40
earn you know reasonable expectations of
13:42
running that this year so it’s always
13:43
been financial and as you and i know
13:45
anton there’s plenty of people who have
13:47
gobs and gobs of money and are the
13:49
dumbest people in the world right we all
13:50
know those and there’s also on the flip
13:52
side people who are modest means or
13:54
maybe not modest maybe they’ve got three
13:55
four five hundred grand
13:57
and they’re super smart way smarter than
13:58
you and me and so there’s always been
14:00
this debate is is that really the right
14:01
way to do it and um you know there’s
14:03
always been this discussion of having
14:05
some kind of a
14:06
you know an examination or some kind of
14:07
test that you might be able to take to
14:09
show that you’re actually sophisticated
14:11
and that finally happened so last year
14:14
um i think back in november it became
14:16
official um that they expanded
14:19
let me put let me make sure i phrased
14:20
this right they did technically they did
14:22
expand the definition of an accredited
14:23
investor but what what they said is like
14:25
look there’s gonna be
14:26
some you’re gonna be able to get
14:28
certified as an accredited investor
14:30
meaning you’re going to be able to go to
14:32
a course
14:33
a seminar you know whatever and then
14:36
that’s going to certify you’re going to
14:37
pass an exam you take an exam pass an
14:39
exam and they’re going to give you a
14:40
certification that says hey anton you
14:42
passed the exam you’re going to fight
14:44
pass it in flying colors anton and so
14:46
you’re going to get certified as an
14:47
accredited investor and now you’re going
14:49
to be eligible for things the challenge
14:51
was when the rule came out the sec still
14:53
hasn’t gotten around to identifying
14:56
who’s going to be you know who’s going
14:58
to be certified to give these
14:59
certifications right right now we don’t
15:01
have you know what institution we have
15:03
no idea what it’s going to look like is
15:05
this going to be a three-day weekend
15:08
seminar is it a self-study is it a
15:10
one-day thing is it just an exam like we
15:12
don’t we have no idea what any of that
15:14
looks like so that’s what we’re waiting
15:15
on and that’s going to trickle in there
15:17
you’re going to get an announcement a
15:19
press release suddenly that’s going to
15:20
say hey this institution has been
15:22
certified so if you go take their course
15:24
pass their exam you can get certified
15:26
the only thing that for now they brought
15:28
in immediately
15:30
was um if you were in a registered
15:32
investment advisor so if you’re an
15:34
investment advisor you will be now as of
15:37
right now you are an accredited investor
15:39
irrespective of your financials and then
15:41
if you pass certain certain exams a
15:43
series specifically a series seven a
15:45
series 65 and a series 82 i believe
15:47
those are the three then again that’s
15:49
kind of the exam that you’ve already
15:50
taken so if you have those those exams
15:52
and pass then you’re also an accredited
15:54
investor but other than that it didn’t
15:56
really change a ton other than it set in
15:58
motion it laid the ground and the
16:00
foundation for to come this although
16:02
it’s already it’s already kind of
16:04
halfway through the year here but uh you
16:06
know we’re expecting something down the
16:08
pipeline that that tells us what
16:10
institutions we can go to to take an
16:11
exam on what that looks like
16:13
okay so so you never hear anything from
16:15
them until they announce it so it’s not
16:17
like kind of behind the scenes uh
16:21
wine that uh
16:22
trickles some information through no i
16:25
mean you know it always gets done with a
16:27
press release or or some kind of a a
16:29
release that the sec does and um you
16:31
know you kind of think about it they’ve
16:32
got
16:33
they probably are in the process of
16:34
coming putting together what what the
16:36
you know what the requirements need to
16:38
be that are going to be taught in this
16:39
course what are the topics that need to
16:41
be it’s almost like you’re putting
16:42
together an approved curriculum that you
16:44
can then say hey look if you go and
16:46
prepare this curriculum then we’re going
16:47
to certify you just like if you really
16:49
if you’re going to a school right you
16:50
want to be certified particular
16:52
curriculums i’m sure that’s what they’re
16:53
doing number one and then going out to
16:55
you know whatever
16:57
you know i’d imagine something like i
16:58
don’t know if you guys those of you guys
16:59
who have taken those sort of sats or
17:01
maybe lsats or mcats i mean there’s i
17:04
think the company’s called kaplan or
17:05
something i mean any of those it’s going
17:07
to be something like that where kaplan
17:08
might come out and have and become
17:10
certified because that’s what they’re in
17:11
the business of teaching and helping you
17:14
pass examples it’s going to be those
17:15
types of institutions that will get that
17:18
certification process done but i’m sure
17:20
that’s what they’re in the middle of but
17:21
we’ll get it through a press release i’m
17:22
sure
17:23
yeah okay so that’s certainly that’s
17:26
positive news
17:28
once once it’s being
17:30
uh finalized that that’s definitely will
17:32
help and it it’s not only will helps
17:34
indicators right so now
17:36
the access to accredited investors only
17:40
uh will increase
17:42
the the question then is okay so now the
17:44
financial information sharing does that
17:47
still have to take place or is that
17:49
completely out the window if you have
17:51
that
17:52
accreditation for my kaplan or whatever
17:54
it is yeah
17:56
and you wouldn’t you wouldn’t have to
17:57
rely on any you could be you could be
17:59
broke you could be
18:00
millions of dollars and you could have
18:02
negative net worth you could be
18:04
unemployed but if you’ve passed your you
18:06
know series 65 or got a you know got a
18:08
certification from kaplan or whoever’s
18:10
going to get certified then that’s all
18:12
you need so i’m sure from a verification
18:14
standpoint all you’re going to have to
18:15
request if you’re going to be verifying
18:16
is just look you know get a copy uh
18:18
maybe it’s a certified copy of that
18:20
certificate and then you’re good to go
18:22
yeah right now just to kind of give you
18:24
a little bit practice that was very
18:25
vague obviously because that’s where
18:26
we’re at i think i’m actually going to
18:28
write a blog on this or maybe do a video
18:30
but i think the fastest path if you’re
18:31
not an accredited investor and want to
18:33
be an accredited investor is the series
18:34
65 exam i think that’s the easiest of
18:37
all of them um so you just take that you
18:39
study for that probably on your own you
18:40
take the series 65 you pass that
18:43
then you register with whatever state
18:44
you’re in and then you’re going to be
18:46
you know you’re going to be in good
18:47
standing and all that stuff and then
18:48
you’d become an accredited so if you’re
18:49
a passive investor who’s kind of really
18:51
desperate to to invest in some of these
18:53
um you know accredited only offerings i
18:55
would look at the series 65 exam as your
18:57
route as it stands right now yeah okay
19:00
very good so
19:02
uh that’s probably going beyond of what
19:04
you already know but does that mean that
19:06
you have to be also registered with a
19:08
firm right because with this 65
19:11
obviously it’s not just that you are on
19:13
your own but you
19:14
in order to practice you would have to
19:17
register with a with a firm right
19:19
similar with on the real estate side
19:21
whereas a real estate agent you need to
19:24
register with a brokerage firm is that
19:26
the same thing with the 65 or the seven
19:29
no the all you need to do is be in good
19:30
standing in your state so i do believe
19:32
there’s a registration requirement with
19:34
the state but as long as you have a you
19:36
know license in good standing then
19:37
that’s that’s what i’ve seen at least on
19:39
the sec website specifically a series
19:41
65. i don’t know why you know this more
19:43
than i do what you know why that they
19:44
would specifically single out series 65
19:46
versus the 82 or the 7 but
19:49
there is on their website they do
19:50
specifically as an example say hey if
19:52
you’ve got a 65 it’s got to be in good
19:53
standing and you’re going to have it
19:55
registered in your particular state okay
19:57
very interesting yeah uh
20:01
i think one one of the order items that
20:03
was uh was quite a big topic amongst
20:07
indicators and whoever wanted to be also
20:10
part of the fundraising activity was
20:14
changes to the fundraiser raising yeah
20:16
yeah
20:17
i have any news on that yeah i don’t
20:20
have any news on that and actually we
20:21
were just talking about this before we
20:22
went off i i may stop stop talking about
20:25
it a little bit because it’s been a
20:26
while now and you know although i did
20:27
say you know second quarter so i guess
20:29
we haven’t run out of the second quarter
20:30
yet but this was a rule that came about
20:33
a proposed rule back i think in october
20:36
of last year or maybe november but i
20:37
think it was october and again i want to
20:39
emphasize the word proposed and so there
20:41
was again a press release and uh you
20:42
know i can’t remember how many pages the
20:45
actual proposed rule was but essentially
20:47
you know as you know i’ve been
20:50
me and many other lawyers have been
20:51
hammering the the social media um
20:54
stratosphere about this this issue of
20:56
money raisers right there are people
20:57
that are actually out there raising
20:59
money for syndicators and getting
21:00
compensated for raising that money most
21:03
most likely in the form of a share of
21:04
the gp and so we’ve gone through this
21:06
whole analysis that you generally have
21:08
to be a broker dealer which obviously
21:09
nobody is or you’ve got to follow these
21:11
strict rules
21:13
the challenge is and i think this is
21:14
what the sec not i think they
21:15
specifically recognize this is that
21:17
brokered dealers and you know this
21:18
better than i do they typically don’t
21:21
like to get out of bed unless they’re
21:22
raising a lot of money right so they
21:24
don’t want to use it’s the same amount
21:25
of work for them so they don’t want to
21:26
raise a million dollars for you or five
21:28
or maybe even 10 they want to be raising
21:30
20 30 50 100 you know 500 million
21:33
dollars because they get paid on a
21:34
percentage basis so it’s very difficult
21:36
for a small time syndicate who’s raising
21:38
one two three five million to get a
21:39
broker dealer and so there’s a gap that
21:42
exists right now in that world that’s
21:43
why i think a lot of people are kind of
21:45
getting into that gray area or maybe
21:47
overstepping the boundaries so the way
21:49
they’ve addressed this is they made this
21:51
proposed rule which would then allow
21:53
people to actually make referrals make
21:55
introductions of people they already
21:57
know
21:58
two syndicators um and get paid a
22:01
commission transaction based
22:02
compensation which historically
22:04
traditionally that’s the hallmark of
22:05
broker dealer stuff but essentially just
22:07
to give you the really high-end
22:08
high-level summary
22:11
you’re going to be if this were to pass
22:12
in its current form you could
22:15
you could refer people that’s already in
22:17
your network you can’t go out and
22:18
advertise and use social media to
22:20
attract those people but if people are
22:21
already in your network and they’re
22:23
accredited
22:24
so it’s only applicable to accredited i
22:26
can then refer that person to a
22:28
syndicator i can actually participate
22:30
somewhat in the process i can be part of
22:32
that meeting i can show the you know my
22:35
my client or whoever i have you know i
22:37
can show them the offering documents i
22:38
can walk them through them i can’t make
22:40
any recommendations obviously but i can
22:42
i can help explain it to them i can be
22:44
fairly involved in that process and then
22:46
if that person were to invest in your
22:48
deal
22:49
then i can i can take a commission from
22:51
that right a five percent two percent
22:53
whatever we negotiate
22:54
now that has to be in writing that has
22:56
to be you know there has to be a written
22:57
referral arrangement or whatever some
22:59
agreement between me and the syndicator
23:01
and of course that needs to be disclosed
23:03
to the investor that’s coming in that
23:05
there’s this relationship because as you
23:06
can imagine it is it does affect
23:08
somebody’s thoughts on a particular
23:10
investment if they know that the person
23:11
making the referral is going to get it
23:13
get paid for that referral so um but but
23:15
the nice thing is you’ll you’ll be able
23:17
to get transaction-based compensation
23:19
and so this was really exciting when the
23:21
proposal came out in november or
23:23
whenever it came out
23:25
the challenge is
23:27
that because of the transition with the
23:28
new administration
23:30
the sec commissioner actually resigned a
23:32
little bit earlier his term wasn’t up
23:33
until june of this year we ended up
23:35
resigning announces his
23:37
his resignation last year there was a
23:39
new sec commissioner that just got sworn
23:41
in a couple months ago i believe it was
23:43
and he’s known to be a little bit more
23:44
although it’s mostly on the wall street
23:46
side but he’s known to be a little bit
23:47
more of a regulator and so
23:49
we just don’t know whether there’s any
23:50
appetite now at the sec that’s under new
23:52
leadership for for this kind of stuff to
23:54
loosening up these rules or if the new
23:56
commissioner is going to take a little
23:57
bit more heart stance so this might get
23:59
tabled until a new commissioner shows up
24:01
or maybe we’ll hear something um you
24:04
know soon now typically it takes
24:06
six months between you know six to nine
24:09
that’s why i say two to three quarters
24:11
between a proposed rule because what
24:13
happens is a proposal comes out and they
24:14
request comments so they they go out to
24:16
the community they say hey please give
24:18
us your feedback give me your comments
24:19
here are some questions we have that
24:21
we’re not quite sure and then they take
24:23
all those submissions after about a
24:24
60-day period and then they formulate a
24:26
final rule taking into account all those
24:28
submissions so that usually takes six to
24:31
nine months
24:32
in fact the the new rules that we talked
24:34
about that came effective last november
24:36
those that can have been proposed back
24:37
in march as you can see it’s a good you
24:39
know six to that was what six yeah six
24:41
to nine months
24:42
so i’m ex i was kind of expecting if
24:44
something were to happen it would be
24:45
happening right around now honestly it’s
24:47
sort of the the end of middle to end of
24:49
the second quarter which is kind of
24:50
where we’re at
24:51
and uh who knows i think you know it’s
24:53
still it’s still there i don’t know any
24:55
i don’t have any you know any any
24:57
updates that nobody’s telling nobody i
24:59
don’t have a direct line to the uh so
25:01
the brains over there the sec but uh you
25:03
you can you can be assured that as soon
25:05
as it comes out then uh we’ll all be on
25:07
social media on youtube oh sure
25:10
yeah absolutely yeah
25:14
so
25:15
obviously that topic of money raising is
25:17
a is always a
25:19
very tricky subject right and we have
25:22
seen
25:23
uh
25:24
i would say both of us we have seen
25:26
deals where uh
25:29
some of the syndicators and uh gp
25:31
partners probably were a little bit in
25:34
the gray zone
25:36
they do to call it they call it lightly
25:38
right
25:40
and uh so
25:42
i think what we also have heard then
25:44
well why don’t we
25:45
uh just do a jv and we don’t have any
25:48
issues right
25:51
which brings up uh
25:53
an order element why that i think a lot
25:56
of uh
25:57
people do not really understand that you
25:59
have to follow very specific rules to to
26:03
truly be a joint venture
26:06
and i think you you wrote
26:09
a book about it or an article about it
26:12
like how to stay out of jail so maybe
26:15
you can touch on that a little bit uh
26:18
yeah i wrote a book it was an e-book
26:20
last year called the five things every
26:21
syndicator must know to stay out of jail
26:23
and the number one thing
26:25
was just understanding what is a
26:27
security and what is not a security and
26:29
that’s probably the biggest mistake most
26:31
people make they don’t realize they’re
26:32
selling securities or maybe even worse
26:34
they realize it but they’re trying to
26:35
get around it by creating some kind of a
26:37
structure and what’s really important to
26:39
understand is that what you call
26:41
something is completely irrelevant you
26:43
can call something a joint venture you
26:44
can call something a syndication you can
26:46
call something alone or whatever you
26:47
want to call it it doesn’t matter
26:49
the sec is going to actually look at the
26:51
actual transaction and so
26:53
anytime you take money from a passive
26:55
investor where the returns are being
26:57
generated by your efforts
27:00
that is a securities offering you are
27:01
issuing securities and it doesn’t matter
27:03
if it’s in an llc or an lp or if it’s a
27:06
joint venture or if it’s uh you know a
27:08
profit sharing agreement or a tick
27:09
agreement or it doesn’t matter how you
27:11
structure it that’s the test are you
27:14
taking money from passive folks where
27:16
the returns are being generated by your
27:18
efforts or the efforts of the other
27:19
co-sponsors
27:20
um and so the same applies to a joint
27:22
venture just because you call something
27:24
a joint venture doesn’t make it so a lot
27:26
of people’s like well i have the choice
27:27
do i make this a securities offering or
27:29
maybe to some extent you have a choice
27:31
if you change the structure a little bit
27:33
but if you have passive investors if
27:34
somebody’s writing a check
27:36
and you’re doing the work even if you’ve
27:38
got 10 people
27:40
and only three of them aren’t really
27:41
doing anything and the other seven are
27:43
those three people are being offered
27:45
securities because they’re passive and
27:46
so in order for a joint venture to be a
27:48
true
27:49
legitimate joint venture where it’s not
27:51
a securities offering or it’s outside
27:53
the regulations of securities
27:55
everyone has to be actively involved
27:57
everybody needs to be
28:00
doing work so that the returns are not
28:02
being generated by one or two or three
28:03
people the returns are being generally
28:05
generated collectively by everyone’s
28:07
work
28:07
and so as long as that’s the case that’s
28:09
fine but keep in mind you can’t go crazy
28:12
i mean typically you want to keep those
28:13
two to five people or less i mean once
28:16
you it’s very difficult to show that you
28:18
have a a joint venture if you have 10
28:20
people in there right or eight people
28:21
because inevitably somebody’s not
28:23
carrying their weight um and then you
28:25
also want to be careful about you know
28:27
you not putting any capital yourself but
28:29
somehow getting you know 20 or 30
28:30
percent of the deal when you haven’t put
28:32
any money in that makes a little bit
28:34
tricky too so in general you want to
28:36
keep it to five people or less
28:38
um you don’t all have to be co-managing
28:40
it’s okay to have one person sort of do
28:41
the day-to-day activity sort of be the
28:43
you know the president or the chief
28:45
operating officer whatever but any major
28:47
decisions you want to make sure every
28:48
single person is involved you know
28:50
obviously
28:51
acquiring or selling or hiring a
28:53
property manager or getting the
28:54
financing or deciding to refinance or
28:56
doing some major remodel you just want
28:58
to make sure everybody’s there
28:59
if it’s only two or three of you it’s
29:01
probably best to have all three of you
29:03
be co-managers or co-runnings and have
29:05
everybody sign
29:06
um
29:07
and obviously to the extent everybody
29:08
can be on the loan as well that helps a
29:10
ton but it’s very tricky i know a lot of
29:13
i don’t do another thing i don’t do any
29:14
i don’t really do joint ventures anymore
29:16
so i kind of i refer those out but i
29:17
refer it out to people who kind of know
29:19
a little bit about securities work so
29:21
i’ll typically get a call they’ll
29:22
describe this as a joint venture i’m
29:23
like oh great let me refer you to uh to
29:26
so and so and then inevitably a lot of
29:28
times i’ll get a call from that person
29:29
and be like hey this is really a
29:30
securities offering because there’s one
29:32
person doing all the work they’re taking
29:34
i mean there would never be an
29:35
acquisition fee or an asset man i mean
29:37
you wouldn’t have that kind of language
29:38
in a joint venture a joint venture would
29:39
just be there’s five of us get it’s like
29:41
you’re starting a business there’s five
29:42
of us starting a business and we’re all
29:44
contributing capital we’re all
29:45
contributing
29:46
something and then we’re splitting the
29:48
profits you know kind of proportionally
29:50
um but uh you know when you when i start
29:52
seeing acquisition fees and you know i’m
29:55
putting in ten percent of the capital or
29:56
two percent of the capital but getting
29:57
50 of the deal that starts to look a lot
30:00
more like a securities offering and not
30:02
not a joint venture
30:03
yeah a very good point right so i i’ve
30:06
had that discussion a number of times
30:09
also right though uh
30:11
we’re
30:12
only five right
30:14
and because it’s such a small group it’s
30:17
a joint venture no it’s not
30:19
so
30:20
just because it’s only three or four or
30:22
five investors still doesn’t make it a
30:25
joint venture unless
30:27
it is truly a joint venture
30:29
you could have one person
30:31
you could have one person be you and one
30:32
other person and you you could call it a
30:35
joint venture but if that person is just
30:36
writing a check and you’re doing all the
30:38
work and going home that’s going to be a
30:39
securities offering unless you can
30:41
structure it a certain way like look
30:42
with one person it’s very easy to get
30:44
around that uh either structure it as a
30:46
as a loan you know secured by you know a
30:48
first position lean on a lot of flippers
30:50
do that uh or just make everybody a
30:52
co-manager there’s two and there’s only
30:54
two people but
30:56
when you get to like i’ve got seven
30:57
people but only four of us are really
30:59
three of us are doing the work and the
31:00
other three or four are writing checks
31:02
and going home
31:03
that’s going to be again you can call it
31:05
whatever you want but the sec and the
31:06
right will see that as a securities
31:08
offering yeah very good point
31:11
uh so
31:12
thank you very much uh mauricio
31:15
if how are our listeners able to uh to
31:19
get that that ebook and uh maybe that
31:21
also brings us to the question how can
31:23
they reach you in general right email
31:27
uh social media whatever whatever it
31:30
might be
31:31
yeah appreciate if they copy the ebook
31:32
you can find that at the website of stay
31:34
out of jail dot com so if you go to stay
31:36
out of jail.com you’ll you’ll you’ll get
31:37
the be able to download that and uh you
31:40
know as you know i’m pretty active on
31:41
youtube so i’ve got a youtube channel
31:43
that i try and provide as much value as
31:45
i can and then the website
31:46
premierelawgroup.net
31:48
you can always reach out to me if you
31:50
guys want to have a consultation always
31:52
happy to i do those myself and so if
31:53
you’ve got questions about a securities
31:55
offering or just the talk in general you
31:57
can swing by the website there’s a
31:58
little you know contact us and that’ll
32:00
get to me and we’ll put something on the
32:02
calendar yeah that’s that’s great uh
32:05
thanks for all the input mauricio and
32:08
the update does your wealth of knowledge
32:11
in in that
32:12
niche as you call it right so it’s
32:14
always great uh
32:16
hearing from
32:17
from someone who is doing it day in day
32:19
out so really appreciate uh
32:22
that you have had time to come on today
32:24
oh my pleasure anton it’s good to see
32:25
you as always my friend yeah same here