Why General Partners Are Not Broker-Dealers

even the syndicator, unless it’s just one person, right? If you’re a syndicator by yourself, one person, yes, you have an LLC, you’re not raising money for other people, you’re raising money for yourself. So you don’t have to worry about broker-dealer rules then. But if you have a co-sponsor, or now there’s two people involved, well, now you’re raising money, technically, when you’re doing your syndication, you’re raising money for the LLC. So the SEC looks at you as the general partner or the manager or an employee or an agent or an attorney, any of those people have to abide by the either have to register as a broker-dealer, which of course, syndicators don’t. But the reason syndicators don’t is because they perform substantial duties, acquisition, asset management, due diligence, property, all that stuff. And their primary role is that and not raising capital. Most syndicators, if they’re doing it properly, are going to spend a vast majority, 80-90% of the time on the deal itself, including asset management. I mean, the deal is going to last five years and very small amount of time, actually raising capital is incidental.

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