1
00:00:00,269 --> 00:00:02,549
Tilden Moschetti: is the project
that you're working on right

2
00:00:02,549 --> 00:00:08,219
now? A syndication are a fun
meaning it's a security, or is

3
00:00:08,219 --> 00:00:11,489
it a joint venture, we're going
to look at the differences

4
00:00:11,489 --> 00:00:15,629
between the two and help you
decide which category you're in.

5
00:00:27,000 --> 00:00:30,270
My name is Tilden Moschetti. I'm
a syndication attorney with the

6
00:00:30,270 --> 00:00:34,860
Moschetti syndication Law Group,
your project that you're working

7
00:00:34,860 --> 00:00:37,770
on right now or that you're
thinking about working on right

8
00:00:37,770 --> 00:00:43,860
now, it's important to decide if
it is a security, or if it's a

9
00:00:43,860 --> 00:00:48,000
joint venture, it's a fork in
the road, and whichever one it

10
00:00:48,030 --> 00:00:51,690
is, is going to dictate some of
the rules on which way you go

11
00:00:51,690 --> 00:00:56,010
forward. So let's talk about
what a security is. First, a

12
00:00:56,010 --> 00:01:00,840
security is most well defined in
a very important Supreme Court

13
00:01:00,870 --> 00:01:07,860
case, that it's the case of us,
versus Howey. Or I'm sorry, sec

14
00:01:07,860 --> 00:01:13,950
vs Howey. In that case, what was
decided was a security is

15
00:01:13,980 --> 00:01:20,160
whenever there is a offering, or
that is basically a collection

16
00:01:20,160 --> 00:01:25,890
of money, with the purpose of
making more money, and relying

17
00:01:25,890 --> 00:01:29,490
on the services of a third
person in order to make that

18
00:01:29,490 --> 00:01:35,070
money. So that's what a security
is. So for example, if you were

19
00:01:35,070 --> 00:01:39,900
to put together a real estate
syndication, where you are

20
00:01:39,900 --> 00:01:45,270
getting investors into it, and
asking investors to come in, and

21
00:01:45,270 --> 00:01:48,270
your investors are taking a
passive role. So you're doing

22
00:01:48,270 --> 00:01:51,780
the work of putting the deal
together and doing the asset

23
00:01:51,780 --> 00:01:55,680
management, and your investors
are just giving you money, and

24
00:01:55,680 --> 00:01:59,430
maybe voting on a few minor
things. But you are the main

25
00:01:59,430 --> 00:02:03,600
decision maker, that is a
security because they're relying

26
00:02:03,600 --> 00:02:08,730
on you, in order to make the
money in the project. A good

27
00:02:08,730 --> 00:02:13,170
example of a project that
wouldn't be a security might be

28
00:02:13,170 --> 00:02:19,320
something like a charity. So
people coming together for a

29
00:02:19,320 --> 00:02:22,620
common purpose to build a
building, perhaps. But the

30
00:02:22,620 --> 00:02:26,970
purpose is not to make money,
it's to do it for a church or to

31
00:02:26,970 --> 00:02:31,590
do it for a boys club, or
whatever it is, that may not be

32
00:02:31,590 --> 00:02:36,150
a security, it might be because
it wouldn't be for the purposes

33
00:02:36,150 --> 00:02:40,110
of making money. In this
context, when we're comparing

34
00:02:40,110 --> 00:02:48,900
and contrasting with a with a
joint venture, the difference

35
00:02:48,900 --> 00:02:52,410
here would be if it's a
security, it would be back

36
00:02:52,410 --> 00:02:57,810
coming together for a third
party. Now, if you and Team A

37
00:02:57,810 --> 00:03:02,790
and Team B, we're coming
together in order to pool funds,

38
00:03:03,000 --> 00:03:08,310
and build a building perhaps.
But you all are like integrated

39
00:03:09,150 --> 00:03:13,110
integrally related. So you're
doing all the finance work,

40
00:03:13,110 --> 00:03:16,800
you're making sure that the deal
comes together, you're making

41
00:03:16,800 --> 00:03:20,640
sure that the rents get paid all
those sorts of things. And Team

42
00:03:20,670 --> 00:03:24,030
A, they're doing all of the
marketing work and talking to

43
00:03:24,030 --> 00:03:28,230
investors and doing those sorts
of things. And TMC is doing the

44
00:03:28,230 --> 00:03:31,410
actual construction, and it's
doing this and it's doing that

45
00:03:31,860 --> 00:03:34,680
that's coming together. But
you're not none of you is

46
00:03:34,680 --> 00:03:38,940
relying on the services purely
of a third person, none of us

47
00:03:38,940 --> 00:03:43,440
pass up, you're all very active.
In that situation. It's a joint

48
00:03:43,440 --> 00:03:47,850
venture. Now, the difference
here is important because if

49
00:03:47,850 --> 00:03:51,900
it's a security, then you
follows under security's rules.

50
00:03:52,260 --> 00:03:55,620
If it's a security, it must
either be registered with the

51
00:03:55,620 --> 00:04:00,150
SEC, or fall under one of the
exemptions, most importantly,

52
00:04:00,150 --> 00:04:06,750
Regulation D, which is what my
firm practices law with. If it's

53
00:04:06,750 --> 00:04:11,130
a joint venture, it is not a
security, but you will need to

54
00:04:11,130 --> 00:04:14,640
do a joint venture agreement.
Now most of the time, those

55
00:04:14,640 --> 00:04:17,640
joint venture agreements will
take place outside of the

56
00:04:17,640 --> 00:04:20,700
securities context. For example,
my firm doesn't work on joint

57
00:04:20,700 --> 00:04:24,030
venture agreements. We can talk
with you about a joint venture

58
00:04:24,030 --> 00:04:28,860
if it's in relationship to an
actual security offering as

59
00:04:28,860 --> 00:04:33,000
well. But if it's just you guys
working together and working as

60
00:04:33,000 --> 00:04:37,560
a as a team collectively, to
make this venture go forward and

61
00:04:37,560 --> 00:04:42,120
make money from that. It's not
part of securities, it probably

62
00:04:42,120 --> 00:04:47,190
falls under local laws as well.
So you have to you would be well

63
00:04:47,190 --> 00:04:50,940
advised to speak with a local
attorney to make sure that it's

64
00:04:50,940 --> 00:04:54,180
drafted in such a way that it's
protecting all of your interests

65
00:04:54,180 --> 00:04:58,260
and negotiated appropriately. So
that's the difference. If it's a

66
00:04:58,260 --> 00:05:02,580
security we're talking essay See
registration or exemption, such

67
00:05:02,580 --> 00:05:06,840
as Regulation D, if it's a joint
venture, it's probably falls

68
00:05:06,840 --> 00:05:11,190
under local law is not a
security, but you'll want a good

69
00:05:11,190 --> 00:05:13,980
joint venture agreement so
everybody knows what their roles

70
00:05:13,980 --> 00:05:17,520
and responsibilities are. I hope
that helps. My name is Tilden

71
00:05:17,520 --> 00:05:20,340
Moschetti. I'm a syndication
attorney with the Moschetti

72
00:05:20,460 --> 00:05:24,000
syndication Law Group. If we can
help you put together a Reg D

73
00:05:24,000 --> 00:05:27,690
offering, we'd be happy to talk
with you and see what we can do

74
00:05:27,690 --> 00:05:28,260
together.