Regulation D rule 506b and 506c involves us indicator finding investors. Now when it comes to finding investors, either we're pulling them from our own internal network, or we're finding them outside. Now one of the ways we can do that is to make sure that those people within our network and those people outside hear our message. And we do that through a solicitation. But what is a general solicitation? And
what does that mean in this modern day and age? That's what we're going to go through today. My name is Tilden Moschetti. I am a syndication attorney with the Moschetti syndication Law Group. We're talking about general solicitation today, we're actually going to narrow it down a little bit more, because we have one question that comes up in my office all the time. And that is, how
social media could possibly fit into this context. Now, to put this into its proper frame, I think it's important for us to look at the rule itself, of what constitutes a general solicitation. Now in the code itself, it's under Reg D rule 502, where they actually describe it, and they don't call it general solicitation there, they call it the manner of offering the limitation on the manner of offering what helps describe it. And that limitation applies directly to rule 506b.
Because remember, under 506c, we can make a general solicitation, well, you can put a billboard up on Main Street, we can do whatever, but 506b, we have a limitation on offerings. So what exactly does the SEC tell us what that means? What is a general solicitation? Well, here's what you can't do. First there is, what we can't do is we can't have a seminar where the whole purpose of it is just to market the offer. So that's
502c(2) that describes it. But Rule 502c(1) one actually describes a little bit better and starts to get on what we're talking about today. And so it says, And they meet any advertisement, Article notice or communication published in any newspaper, magazine, or similar media or broadcast over television or radio? Oh my goodness, do these people live under a bridge? Or what? Because that needs to be severely upgraded. Newspapers? What are those magazines? I've heard of
them? They mean, like those digital magazines talking about? What about social media? And that's a question that I get all the time. So the argument could be made, and I think not correctly. And we'll go through why in a minute. That? Well, when I add when I post something on Facebook, I'm posting just to
my network itself. So those people who already know me, right, so those people who already know me, they can know that I'm doing it, and it's not a general solicitation, it doesn't really fit in to what they were talking about under Rule 502c1. However, the difference is the substantive ness of that relationship with those people that you have on Facebook. I mean, my Facebook account has many, many followers. And the reality is, I probably know 100 of them.
There's probably 400, 500, 600 people who have liked my page, and I've accepted their friend requests. And I don't actually know them. Now on LinkedIn, that's also very common. So these are be friends, friends of friends, friends, of friends, of friends of friends and friends of friends or friends or friends, or people who just sent me advertising and we're in similar industries. And so I add them. That is the case and the
SEC knows it, and the courts know it. So when it comes to actually making a solicitation, if I were to post about my Rule 506b offering, hey, come look at this that I'm offering. Come invest with me now. I'm making a general solicitation because it's going out to people who really aren't part of my internal network. So it is taking advantage of that similar media broadcast, right. So I'm broadcasting it out over the wide spectrum. So social media itself needs to be very careful
when you've got a 506b offering. Now, certainly I could probably say something like, Hey, I'm a hey, I'm going I am going to be invest stick into XYZ and not make anything about investors or come invest with me or anything else. Or, Hey, I've been doing a lot of work in real estate or securities or private equity or crypto mining or whatever it is that you're doing. I'd love to
talk to all of you about it. And then as part of those conversations, not pitch them immediately unless it happens to be somebody you actually already have that substantive relationship with. But then you can take that conversation offline, you have a conversation in general about those, you wait a period of time and you reintroduce it, we have other videos that talk about exactly that process. And you can find
them on my channel. Where the key takeaway here is this when you're selling securities, which involves the sale of stocks, bonds, mutual funds, real estate, and the sort of interest where somebody has a passive role, you as a syndicator must comply with the securities law, obviously. Now, syndicators can choose to register with the SEC, or you can find an exemption, or you can risk being considered an illegal activity. Exemptions like Reg D Rule 506b, and 506c, are very popular and useful. And
it's what my law firm specializes in. And they provide a certainty and save time and money. But here's the main key takeaway. Social media advertising is a major concern for you. It can impact the exemption 's use, and it can require an enormous amount of penalties, which you don't want to hit if it's been used. So treat social media as if it is really media, the emphasis in that term, as it would be looked at by the SEC or court is media which means general solicitation
almost always. So use it with caution. If you've got a 506b offering, do not talk about your your offering in any sort of specific terms or that there's even a possibility of investing with you, because that will be eventually used against you, either in this offering or in some offering that you make down the road. My name is Tilden Moschetti. I am a real estate syndication attorney with Moschetti syndication Law Group.
And if we can help you do your own syndication with by providing you the documents and the assistance you need to make yourself successful, we would be happy to help you