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Tilden Moschetti: What does it
mean to have a fiduciary duty

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for a syndicator or a fund
manager? It is a principal thing

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that should be ingrained in your
blood. It should be a visceral

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feeling that you have, that
you've got this fiduciary duty

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and you treat your investors
appropriately. Now, what do I

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mean by this, let's talk about
it in this video.

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A fiduciary duty is simply
putting your the best interest

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of your investors before your
own. Now that sounds very easy

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and lofty, but what does it
exactly mean? There are five

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principles of fiduciary duty,
the duty of loyalty, duty of

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care, duty of confidentiality,
and the duty of impartiality,

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and we'll go through each of
those. But basically, think

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about your fiduciary duty this
way. This is the way I like to

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think of it, your investors are
giving you an enormous amount of

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money. They're giving you 50,000
100,000

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sometimes over a million dollars
of their money. That's an

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enormous amount of trust that
they're placing with you. And we

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have to take that extremely
seriously, and that's why, when

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I say you have got to feel it,
you've got to really feel that

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level of trust. Because, man,
there are putting a lot of trust

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in you, and you've better earn
it. So it's not and by earn it,

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I don't mean you have to hit the
targets or else. I mean you just

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got to do your very best for
them every single time and in

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every decision you make, the
duty of loyalty is the first

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main principle. It's the duty to
act in the best interest of the

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investors, avoid conflicts of
interest and prioritizing the

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goals of the syndication over
your personal gain. So by this,

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what we really mean is, I like
to think of it as avoiding

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conflicts of interest. Now,
there may be, there always are

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conflicts of interest in a
syndication, but like taking a

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kickback or things like that, is
never in your best interest of

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your investors. It's okay to do
that, but I would disclose it up

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front, like, for example, I'm
going to be paid, you know, by

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10% of the development fee by
the developer who's going to be

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hiring us for this, something
like that. Whatever it is, it's

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got to be disclosed and made
super, super clear, because we

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don't want even the appearance
of a breach of the duty of

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loyalty. If you're not going to
be 100% you got to just tell

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them, tell them that you're
doing it.

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So that's the number one thing,
is, have this duty of loyalty.

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The second key principle of
fiduciary duties is the duty of

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care. Remember, they've given
you all this money. How would

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you want your money manager or
your syndicator you've given all

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of your money to to treat it?
You would want them to do every

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single thing that they can in
order to take good care, nurture

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it, Shepherd it, steward it,
whatever words you like, in

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order to make sure that you get
what kind of return is possible.

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So really it's making all those
good decisions, being thorough,

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conducting good due diligence,
really just working hard and

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being truly, truly professional
about every single element of

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your syndication or your fund.
The third key principle of

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fiduciary duty is a duty of
disclosure. It's telling your

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investors about everything that
they need to know. If it's

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material, they need to know it.
They don't need to know that the

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third blade of grass finally
came, grew in. They don't need

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to know that level of detail,
but they may need to know that,

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hey, we had some vandalism that
took place on the property, and

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it wiped out a whole section of
our thing. And now we've got to

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go find a new gardener in order
to do this. Whatever that is

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right, that's relevant, that's
material, disclosing that,

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especially disclosing before
they invest right? So anything

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that they might be interested
in, conflicts of interest,

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especially that you're going to
be getting kickbacks, or how you

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get paid, how what your
interests are in the property,

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those sort of things should be
disclosed. Anything that could

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change a potential investor from
a yes to a no, they need to know

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about very, very clear, that is
the duty of disclosure, the

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fourth principle of fiduciary
duty. And I take this one very

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seriously, and I'm probably
different than a lot of other

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syndication attorneys as it
comes to this, is the duty of

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confidentiality. Your investors
are trusting you with a lot of

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money. I've done quite.

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Few syndications for myself. I
continue to do syndications, and

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I have investors in my roster
who have invested in my

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projects, who are well known
people, right? So they are

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people who are sometimes
household names or people that

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you probably have heard of as
well. It is paramount that their

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their confidentiality is
maintained. They don't want

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everybody knowing about well, we
this person invested in this

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thing and this person invested
in that thing. It's not relevant

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to everybody else. It's relevant
to them, to their investment

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decision, maybe to their wealth
advisor, whatever. But it's not

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relevant to every other
investor. I make sure that we

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have this discussion when I'm
putting together a PPM and an

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operating agreement, because I
think that duty of

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confidentiality is very
important. I know as a as an

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investor myself, I don't want my
how the amount of money that

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I've invested, or even the fact
that I've invested in a certain

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project, to be known unless I
really make it clear that I want

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it to be known, which is
probably never the case. So that

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duty of confidentiality is one
of the key

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fiduciary duties, and it should
be a part of your syndication or

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fund as well. The last fiduciary
duty is the duty of

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impartiality. Now this actually
comes up a fair amount so, and

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where it comes up most often is
in redemptions. So let's say

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you've got a fund that has a
portfolio of $20 million and you

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have decided, okay, we're going
to make available $2 million

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that for redemption so people
can get their cash out. Because

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we're shrink, starting to bring
down the portfolio size.

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You have a choice to make, and
how you can apportion that, that

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redemption availability, out to
your investors? You could just

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go to your favorite investor,
but would that be fair to all

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the other investors? No, it
would not be. We have to be very

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careful to not favor other
investors, and not by dollar

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amount either. So it doesn't
matter whether the you have

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somebody who invested $50,000

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and a million dollars, you need
to treat them fairly, but you

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treat them fairly in proportion
to each other. So you may allow

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a redemption for both those
investors, but it has to be in

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proportion to their investment.
So that way it is truly

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important, impartial on $1 for
dollar basis, not on a per

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investor per investor basis.
That's the way I think is most

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fair. It's the way nearly
everybody wants to put it in

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their syndication documents as
well.

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We have to favor things very,
very fairly and really think

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about what is the fairest way to
do it for all of those investors

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at the same time. My name is
Tilden Moschetti. I'm a

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syndication attorney with the
Moschetti syndication Law Group.

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We help invest syndicators and
fund managers just like

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yourself, in order to be
compliant with all of the SEC

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rules and state rules, and at
the same time, we help you

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through this kind of decision
making on how to be the best

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fiduciary you can be, because it
not isn't not just good business

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and lawful, but it also makes
your investors happy, Which

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means they stay with you and
keep investing with you. So it's

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a good thing to be doing if we
can help you with your

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syndication or your fun, give us
a call, set up an appointment,

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and let's talk about what you're
working on.

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You.