Private Mortgages, The SEC, and Paperwork. Oh my!

[AndyJ]

I have been hitting up some well to do folks I know, looking for private funding to do deals. Well, lo and behold, it appears as if this will come to fruition next week. I have several investors who I will be meeting with to explain the details of what I do and where they come in, etc.
I know from some research that an SEC filing is probably in my near future. Can anyone shed some light on this?
Also, I will need a financial disclaimer to be given to anyone who plans on participating. Can someone tell me about this? Where would I find one?
And what sort of client profile/information form should I use and what should be included on it?
Many thanks.

[mike_mn]

ah....ummm....err....aaaahhechhm

A...T...T...O...R...N...E...Y...

Specifically one who specializes in SEC filings. This is not something you do on a tight budget.

[TommyOH]

Where are you at Andy? It all depends on the state you are operating in. Some states, like Ohio let you have 9 investors without filing, others will let you have up to 15, and others yet will require immediate registration.

[AndyJ]

Tom, I'm in Florida, (and if it matters, my investor is located out of the US).

[TommyOH]

Well, check out this link:
http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=Ch0517/SEC061.HTM&Title=->2004->Ch0517->Section%20061#0517.061
Especially Section 517.061 (10)

Hope that helps.

[TommyOH]

I am not an attorney, and I would never suggest someone not seek competent advice. Having said that, the SEC is not some big monster that is out to get you. They are actually more than willing to help small business people comply and succeed.

This topic came up a few months ago, and since then I have spent many hours speaking with the small business ombudsman at my state, and the federal level. If you are doing things legitimate, they will help you all they can.

Don't brush off Regulation D exemptions, they are there for a reason. If you are a small business, searching for just a few investors, backed by a private motrgage and a deed, you are exempt in almost every state by Regulation D.

If you are searching for a stable of investors, then that is a different story. Then you do need to register. But that is not as scary as it sounds either. There is a one or two page form that you need to fill out, and provide some documents including financials, business structure, etc. It's not that difficult to comply.

It all comes down to how many investors your state will allow you to have before you have to register. Once you get to that point, things change and you have to register. It also depends on the scope of your advertising. If you advertise in different states, you need to comply with their SEC regulations as well.

I agree that having a lawyer to navigate all this would have been easier. But you can directly work with the SEC. I found them more than willing to help.

[TommyOH]

As usual Tim, you've given me something to check out...lol. I wonder why the feds didn't tell me about this Section 4(2) exemption. Sounds like it may fix that problem of out of state investors. Thanks for the tip.

[TommyOH]

Transactions by an issuer not involving any public offering.....
Kinda defeats the purpose of advertising dontcha think?