When does an investment become a security?

[Rodney Miller]

I was under the impression that when you pool together investors on a syndicated deal, you have essentially created a security.  I was having lunch with a local syndicator with several deals going and he told me that he doesn't have to comply with securities laws because his deals have fewer than 50 investors. I've looked into 506b and 506c and I don't recall there being a number of investors threshold.  Can anyone help me out here?

[Brian Adams]

@Rodney Miller I am not an attorney and you should seek legal counsel.

To be helpful to you, when there is an expectation of profit by your passive investors, you are playing in the security arena.

There is no exemption for friends or family or fewer than 50 investors with respect to private offerings to get around selling a security.