Private Loans/SEC Regulations

[Joseph Turner]

Hello:

I have done numerous searches for information pertaining to soliciting/using private money and SEC regulations on BP and other sites and am having a hard time formulating a basic understanding.

I do not want to be one of those posters looking to be spoonfed information, so if you have some links to great resources to better my understanding, that would be excellent.

Here is my situation. I reside in California and am looking to borrow money from folks that I know in California for investments I am planning on making in another state. At present, all funds acquired would be from individuals I am either related to or have had some sort of relationship with (personal, coworkers, etc).

Private Loans vs. Investors

Can someone explain the difference between how these relationships are viewed by the SEC?

Private Loans secured by specific property vs. Private personal loans

Is there a legal difference with respect to SEC securities laws if I secure a single loan with a single property versus simply agreeing to a personal promissory loan that is unsecured?

Lender funds: Personal vs. Self Direct IRA

If a person wishes to loan me money, does it matter whether or not their funds come from their personal savings/checking accounts versus a self directed retirement account?

My understanding is that loans are treated differently than investor equity stakes, but I am not sure in what way.

I suspect that the SEC doesn't get involved on personal promissory loans and that their jurisdiction comes into play if I secure a loan with a specific property.

It is further my understanding that the source of the funds lent to me are irrelevant.

Thank you for your patience and time.

[Jon Holdman]

Securities are defined by the Securities Act of 1933

http://www.sec.gov/about/laws/sa33.pdf

The definition is:

So, are loans securities? Sure looks to me like they could well be considered as such. Does the SEC search public records to try to find loans from one person to another? I doubt it. Is there any way for the SEC to find out if someone made you a personal and undocumented loan? Beats me how they would do that, other than if the lender told them.

Where can it go bad? If you get a loan and don't pay it back, the lender may well choose to pursue you. The whole purpose behind private placements and all those filings is to protect you when things go bad. Ever looked at a private placement memorandum? I have. It says stuff like "This is a horrible investment. You WILL lose all your money. You are an idiot for making this investment. When you lose your money, don't blame me." It may not be quite that blatant, but its close.