When does forming a multimember LLC count as a security transaction

[Eli C.]

I am looking at forming a multi-member LLC with some other investors. I would be the managing partner. My concern is that this may be considered a securities transaction.

- There would be less then 35 members. Probably close to 20
- Members share/ownership of the LLC and thus the property would be a percent based on initial investment. So someone investing 5% of the purchase price of the property would be a 5% owner of the LLC.
- I have some real estate experience, most of them don't have any
- we all have graduate degrees (does this go toward qualifying as "sophisticated investors"?)

We have council and they will go over everything before anything official is established, but I would hope to learn from the wisdom here and pay less to council for looking at this longer then required.