SEC Rules for Raising Money Through Syndication

[Account Closed]

Hey BP,

I was recently listening to the awesome interview that's in the BP blog that @Douglas Dowell did with securities attorney and syndicator Gene Trowbridge. It was full of some great information but it really raised a big question for me.

I have always heard the phrase, "If you find a great deal the money will find you." (If you look for it of course)

After listening to Gene though, he made that whole idea sound completely illegal when operating through a syndication. He was talking about how when you make your first contact with a potential investor, you really aren't supposed to even mention a deal you are working on or give them any idea of a future project you will be doing. Or even have a deal in your mind that they can invest with you on.

He also said that there is supposed to be a cooling off period (although he admitted there isn't a specific number of days or time) that the SEC doesn't want you to present a deal to a new investor.

After hearing this, it really dismissed the idea of money finding you if you have a great deal.

I'm confused about it though because there are still some syndicators out there who push the idea of "the money will come to you if it's a good enough deal."

Which school of thought is correct here?

Gene really made it sound like you have to absolutely without a shadow of a doubt have all of your investors vetted and lined up way before you even consider a deal.

Do you guys have any thoughts??? @Brian Burke @Bryan Hancock @Jeff Greenberg @Sepehr B. @Eric Tait @Dave Van Horn

(I hope you guys don't mind me tagging you :) )