Are Joint Ventures Securities

People want to be a syndicator, they want to raise money for a big apartment or even a small apartment. What are they doing wrong? I think the biggest mistake that I see is kind of what we just talked about, which is people not realizing that they’re selling securities. So newbies, it’s easy to understand, the more sophisticated syndicators doing it more often, they think they can get away with something. Oh, I’m going to do it this way, I’m going to get really creative. And trust me, the SEC knows all the little creative ways. And again, the structure itself doesn’t matter. So in the tax world, they say, if you want to change your tax, change your facts. Same thing here, if you want to go from a securities offering that’s borderline into a joint venture, then change your facts. Make sure you don’t have anybody who’s passive. Make sure that everybody’s actively involved. And try and limit it to four or five people tops, because the SEC’s already said, once you have more than five people, it’s going to be very difficult for you to argue that everybody’s actively involved. There’s usually somebody who’s just passive.