is the project that you're working on right now? A syndication are a fun meaning it's a security, or is it a joint venture, we're going to look at the differences between the two and help you decide which category you're in.
My name is Tilden Moschetti. I'm a syndication attorney with the Moschetti syndication Law Group, your project that you're working on right now or that you're thinking about working on right now, it's important to decide if it is a security, or if it's a joint venture, it's a fork in the road, and whichever one it is, is going to dictate some of the rules on which way you go forward. So let's talk about what a security is. First, a security is most well defined in a very important Supreme Court
case, that it's the case of us, versus Howey. Or I'm sorry, sec vs Howey. In that case, what was decided was a security is whenever there is a offering, or that is basically a collection of money, with the purpose of making more money, and relying on the services of a third person in order to make that money. So that's what a security is. So for example, if you were to put together a real estate syndication, where you are getting investors into it, and asking investors to come in, and
your investors are taking a passive role. So you're doing the work of putting the deal together and doing the asset management, and your investors are just giving you money, and maybe voting on a few minor things. But you are the main decision maker, that is a security because they're relying on you, in order to make the money in the project. A good example of a project that wouldn't be a security might be something like a charity. So people coming together for a
common purpose to build a building, perhaps. But the purpose is not to make money, it's to do it for a church or to do it for a boys club, or whatever it is, that may not be a security, it might be because it wouldn't be for the purposes of making money. In this context, when we're comparing and contrasting with a with a joint venture, the difference here would be if it's a security, it would be back
coming together for a third party. Now, if you and Team A and Team B, we're coming together in order to pool funds, and build a building perhaps. But you all are like integrated integrally related. So you're doing all the finance work, you're making sure that the deal comes together, you're making sure that the rents get paid all those sorts of things. And Team A, they're doing all of the marketing work and talking to
investors and doing those sorts of things. And TMC is doing the actual construction, and it's doing this and it's doing that that's coming together. But you're not none of you is relying on the services purely of a third person, none of us pass up, you're all very active. In that situation. It's a joint venture. Now, the difference here is important because if it's a security, then you follows under security's rules.
If it's a security, it must either be registered with the SEC, or fall under one of the exemptions, most importantly, Regulation D, which is what my firm practices law with. If it's a joint venture, it is not a security, but you will need to do a joint venture agreement. Now most of the time, those joint venture agreements will take place outside of the securities context. For example, my firm doesn't work on joint
venture agreements. We can talk with you about a joint venture if it's in relationship to an actual security offering as well. But if it's just you guys working together and working as a as a team collectively, to make this venture go forward and make money from that. It's not part of securities, it probably
falls under local laws as well. So you have to you would be well advised to speak with a local attorney to make sure that it's drafted in such a way that it's protecting all of your interests
and negotiated appropriately. So that's the difference. If it's a security we're talking essay See registration or exemption, such as Regulation D, if it's a joint venture, it's probably falls under local law is not a security, but you'll want a good joint venture agreement so everybody knows what their roles and responsibilities are. I hope that helps. My name is Tilden Moschetti. I'm a syndication attorney with the Moschetti
syndication Law Group. If we can help you put together a Reg D offering, we'd be happy to talk with you and see what we can do together.