Podcast – CrowdEngine™ Legal Hour


May Questions

1:06. Story of advertiser, YayYo who got in trouble with the SEC or FINRA

8:51 When can you touch the money from a 506c see if it's going to be used for a reg A plus raise

13:21 Confusion in the marketplace about crowdfunding

19:31. A little bit about 506B

20:39 The use of credit cards to fund securities purchases

26:24 Are the aggregated sites that show portals restricted in any way for showing and saying something about the offerings

30:04 If my website allows people to create a campaign is that crowdfunding

32:25 How do I make my website or raise legal

35:25: Can an investor be an employee in the deal

37:03 Who checks the compliance of the requirements under regulation a plus

38:07 What constitutes AML or anti-money laundering

39:26 Talking about testing the waters

45:54 Is there a legal difference between a platform and they portal

48:22 Can a regulation A+ securities be liquidated in the secondary market

50:08 How soon could a 506C or B be liquidated

50:45 Are there any legal parameters on how long a raise can be live

April Questions
1:15 What do they need to do to prepare

8:25 What are the top three things reg A plus applicants need to be prepared for for their finra approval

11:45 What is the timeline you're seeing for reviews

13:20 What are the most common mistakes you see being made

15:40 Talking about the financial Choice act

18:37 How does an initial round get affected by crowdfunding rounds

23:50 What's the guideline difference between a CF raise and a regulation D

26:35 What are The SEC financial requirements for CF classification

29:20 If you're already publicly traded can you crowd fund

30:43 Can Canadian companies crowd fund in the US

30:55 Can you crowd fund and still not become a public company if you want to stay private

31:42 Outside of real estate what verticals do you see most used for crowdfunding

32:55 When I got marked the laws around directly soliciting investors

35:00 What are the legal obligations of an equity crowdfunding site

36:35 Success fees?

37:25 Clarification on regulation D

43:17 Legal fees and PPM's versus template PPM's

50:25 Do you see regulations open for more people to get paid on different roles


====================   Transcripts of some of the above Podcasts  ====================

January 2017

hello this is Brent Brague from crown

engine we’re joined by Marty Tate from Carmen Lynne off-spinner is open you’d like to welcome everyone to this month the veetle hours money date to start this month we have a question regarding broker-dealers could issue is offer

their own offerings the final six feet Marty what are your thoughts so nice to be here Brent actually snowing here in the new college is great so going to your question can issuers off of their own offerings under a 50 60 offering

absolutely so i think that that this came in from one of the participants and they were trying to make the distinction between the prohibition under Regulation cs4 for a6 deal that prevent or prohibit platforms of licensed intermediaries

from having a financial interest in the issuer’s on their portal is we discussed in previous podcast any license portal doing offerings anorexia have cannot have a financial interest in one of their issuers and the i guess the

exception to that is they can take cop equity compensation in an issuer as part of their you again their compensation for doing the grabbing on the portal we can contrast that with a platform that is doing offerings under 50 60 or more

titled to there is no similar prohibition in those deals so if you have a platform and you want to put your deals up on it and offered only to accredited investors there’s no problem with that I would you know I think the

only real issue with that is you need to disclose no interest that you have if you’re trying to market yourself as the sort of third-party no funding platform you would need to make sure that you disclose your interest in the issuer if

you get your company or if you have a financial interest in that company i want to make sure that it’s closed so that nobody can come back to you and you may claim that they didn’t la there was a conflict tip of

each you would disclose that I would disclose that on that on the platform as well as in any offering documents and materials you provide perfect so now the time to write your questions to Marty and I will facilitate those questions

our first question comes can you please just got the market limitations of a regular platformer title three platform and their offerings yes so there’s a lot of clothes a lot of confusion of you know what can i say

with 50 60 what I say with drexciya and I was that contrasts with regulation by will succeed vs be and then also regular plus yeah so all right temperature there we’ll start with title three friends straight like to start one question and

then blocked it and then throw in like six appendages to that but you know i’ll just go right back at you with the run on answer how about that so under ACF you are an issuer and a platform or Earthman that in what they

can do and there is a slight distinction between what the platform I’m sorry the portal the funding portal can do and what an issuer can do and you know there’s I guess there’s some similarities in addition slight

distinction one of the things that with respect to advertising under xes and I got this question the other day is what can we do before we we launched the answer is nothing well not nothing nothing but yeah you

can be careful not to very differently every witness to a condition the market which means you know if you’re doing if you start ramping up your advertising of your product know you can advertise your product you can continue to do your

marketing campaigns you cannot say anything about the offering or anticipated offering a client same way can we say we let people know that you know going to be starting soon no can you let people know your

customers know that you know there’s an exciting opportunity that coming and probably not but can you continue to market your product absolutely you can market your brand thing that we are a record of portal and

we will have deal of the time let’s play let’s back up because again that’s the tutorial right i’m talking about the issuer so Sammy so let’s get started to persecute a four-level what could the portal do while they’re

building their put their portal while they’re getting things ready while they’re finding issuers how did they market and put themselves on the map if if they can so they could they could there’s nothing to previous to the

portal itself from marketing for trying to advertise I think the key there would be good to be very careful as you know to shy away from until it license until they are approved by yet seen finger from saying that they are a funding

total or a license in the area or any one of those buzzwords that would give him in trouble until they’re actually licensed that they could go out and say hey you know this is who we are when we are planning to facilitate offerings

under xes reply a guy there’s nothing that would prohibit them from doing that what’s their license they can go out and advertise their platform they can say I mean they can drive traffic there to the website of

the portal they one of the things that have to be sensitive of is that they’re not promoting any single issuer it’s okay to mention issuers on their side its okay its advertising say hey to to highlight issuers that a sort of the

line they have to walk is they can’t be paid to try to promote these offerings now I think that I get my inbox is flooded every day with emails from licensed portals that are saying it is you know

check out this company check out this company check out this offering we want a gray area of the case by houston defined for a better and so we be current portals potentially stretching the guidelines already

yeah and I don’t know if they’re stretching I think it’s just uncharted territory and anyways talked about this previously that the SEC has been surprisingly willing to work with platforms work with portals and I think

they’ve been pretty pretty little in there playing you know tradition a lot of things that initially as securities lawyers and cross-cutting water saying oh no you can’t do that and we have calls with the SEC and we’re seeing

people doing those types of things do you want to go into you want me to go into I think this check and third fourth part of your questions hit like and if there’s significant distinction that are on the top of your head i think its

benefit others but if this is jumbled not that it takes a lot of pot that overly view of the pressure unless you have ate that so I i can go down the path of what can you know after it again after a launch of funding portal under

xef can they can advertise their you know the existence of their portal and they can highlight certain certain issuers but they have to sort of be you know they can be compensated to highlight one insurer over another it

has to eat use based on criteria that they’re applying the democratic fashion I guess do you want me to talk about what issuers can do during a campaign with that part of that question

ok so issuers going back to this thing i said before issues prior to filing their form C cannot say anything they can get any sort of marketing once the form C is filed with the SEC the campaign is life they can you two types of advertising

one is a tombstone communication which is basically this is who we are this is what we do this is what we’re doing this is to turn to the offering or offering the uncomfortable that we’re offering equity investments they can talk about

the basic terms of the offering see they can provide you know actual contact information about the the issuer brief description of the business and then a link to wear these to the portal where that offering is taking place they can

also do what are called non terms awesome links and this is where x we get into you know this is why I get a most of my questions about that you can talk about the offering so long as you don’t mention the terms so you can

say become an investor or become a you know an investor in X company investor means you could be a dad or actually in that you’re not talking about the type streets being offered Paris 10 being you know just something about the company

you know more information could be called the action can you straighten up now then I got what we yeah that’s fine as long as one I had a client asked could you say could you you know have a banner ad that said become an owner in

or own a piece of the action or something like that in this company become you know an owner of the next something there’s two things that I didn’t like that one is owner implies you’re definitely so that’s a term the

offering the other thing i didn’t like it about is any time where you say where the next anything that you know because usually nobody says is that where the next company in order to have heard us he’ll always a where the next Facebook

or the next you know success company that they’re trying to take on two that’s that’s dangerous for other reasons because that’s misleading and potentially fraudulent so so look changes also directly of cans affiliated

people not the only the portal be compensated for guild on there i’m a wreck CF portal so casually a personal funding portal refuse funding portal to raise money when the funding portals not benefiting from the deal itself to repay

affiliated persons so there’s a person that wants to use the funding portals I just a buddy let me put my deal on your portal you’re going to kill that you post it on my portal because I’m your friend but the funding post-marketing

compensation can that affiliate person received compensation is any mechanism for them to receive compensation for the funny Boyle so we’re talking again accusing term funding portal right we’re operating in the red sea ash

Kirk and thats I say that just because a slight there’s a possibility there you go under xef you cannot pay commissions to anybody unless they’re broker-dealer so and that’s true generally write initial funding portal couldn’t pay

commissions to this person for putting their promoting deal on that the platform is funny portal can however pay you know they can pay broker-dealers Commission’s they can also pay the outside marketers to promote their their

funding portal they just cannot pay them for providing personally identifiable information that campaign for investor list i can’t pay him for you know hey we’re going to drive we’re going to drive these people there and they’re

paying them for that information they can pay them to market and advertise not to that information that answer the question yeah so far as you’re concerned celestial spheres little here our next question I think I get all the

time I assume you get quite often as well it says i’m starting a crowdfunding platform soon so i have the idea of crowdfunding drinking the kool-aid i would like to know what I need to do to legally do legally one offering such a

platform so what’s missing is the business model what’s missing is what type of platform but they still 10 ok where do I start so let’s knowing that it’s very difficult to answer such a general

question because it really depends on what are you trying to do and how are you trying to do it and then based on those answers we could be more definitive on potentials let’s go over some basic models for a bt

perspective or non BB perspective over the models people may want to consider when putting their feet into the crowdfunding water of okay i have a clean slate guideby yeah and again that’s without the business model that’s

without you know what time is it I do get this question a lot to you and the first question that i’ll ask is you know what what your focus to what type of so you’re going to be doing who and who do you want to attract the type of

investors and and what is the size of the deal so for example it’s coming said hey we want to help fund startups where an incubator we want to help get money raised money for these startups okay great what size of the offerings ok

from that we’re going on under me so based on that of the smaller rings all right well great then write CSS deals might be good for you ok well what does that take well in order to do that you’ve got to be

licensed with the sec and finra so the questions okay well what does that entail and we go down that Japanese okay well that is going to take me you know several months to go through how do we get there faster and then I talk to them

about ok you can do deals under 50 succeed to accredited investors and then a lot on second question is what kind of both at the same time once I and I start with one and then once we get approved with the SEC can we develop the same

time the answer is yes you can and will help you figure out how to do that so that’s that’s typically the the line i go down sometimes I’ll call you something up onto hey we’re thinking I’m crowdfunding and I realized and I’m sure

you get this to brian they say we want to do a precedent want to be a platform and you realize that you’re trying to do is they’re trying to raise money for trying to raise a lot of money for maybe a spot they want to know they’d be more

we drill down on it they say you know what where you got all these real estate projects that we were looking for financing for and we want to be able to you know by certain assets want to be able to do some landing on ability sinks

and I’ll steer them and say well you know you don’t really want me a platform you want to do I mean you’re looking for funding source for all these such project you might consider forming putting the other real estate fund and

we could do a rate plus offering for that and whatyou advantages about the goodies i get that call all day every day right it’s whether they want to do individual like a 6-foot type of model where I am

touching 5 10 20 50 bills a month but they’re all sub hundred thousand too hard thousand they may have a credit much as they could certainly have space for unaccredited investors and they’re

usually have more opportunity to buy but they also have to have funding very quickly they can’t afford to post the deal and way too much that deal of fun they have to have that escrow closed within usually 30 days they’re doing it

and so quite frankly the crowdfunding model doesn’t work for that quicker turnaround for that predictability for the deal to fund that quick yeah right so in that case that might make sense to have hey lets it create a

fun where you have these you know we have capital to make those quick type of investments so you know you go out and raise five million dollars or 10 million dollars or whatever it is to go and do that and crafts Sonny might be an answer

for your reggae plus might be the answer you know you’ve got to go through the sec and finra it’s going to take time to do that it’s going to be more expensive to do that especially if you’re dealing with an attorney you accept this rodeo

and you’re paying them to see that you’re paying somebody that might be a great securities lawyer bit the first time they’ve done and you paint them to learn it go through that process so that’s a possibility i will say and I

say this to everybody that calls me with any of these things crowdfunding is you’ve got to ultimately figure out how you’re going to try to traffic there and the investors they’re great he’s cute

you have a reggae plus offering you go through that process and file and then you know it’s crickets because you haven’t thought about how am I going to drive investors there and so do you have to be a broker-dealer to do a fund you

have to be a broker-dealer to do the model you just talked about because usually there’s the concept and then the question of window after the broker-dealer and went after your broker dealer and how do i know if i ask

captain industry they telling one thing about the other half the time of the other thing and brand I’m really confused with my typical conversation could you shed any light on that you have assigned to you need to be

properties are no absolutely not and he typically wouldn’t be do you didn’t make sense to use the broker-dealer to help sell your fund especially a reggae plus yes you have to know but why do you say

that just just to give some color behind your ear answer I get you anything goes back to what i was saying before you got to be able to sell the deal right syndication purposes because I

broker-dealer may be connected it may be worth hiring him for his expertise to bring investors through that work yes and so whether you’re paying a marketing person reprinted broker-dealer it sometimes would facilitate the deal be

funded inside what you’re saying is well you don’t need to be a broker-dealer leveraging the expertise appropriate maybe strategic value and depend on the merits of the broker-dealer and the cost and what they’re taking may be worth the

estimation absolutely because because the end of the day you file your approved with the SEC frugal spin around your you’re too intense you gotta sell it and it’s great he’s aight up on the website you know crowd engines to build

out an awesome platform for you everything is there but the eyeballs in the investors if you have that marketing expertise or if you are a company that has you know hundred thousand or a million customers already and you have

the ability to say hey go check out our great plus offering become and you know become an owner in this company then you know broker-dealers nuttin as long as you’re not paying anybody Commission along the way

yeah it wouldn’t be needed but most people the emotions like for example who’s been talking about fund most of those funds are not to don’t meet that criteria they need to figure out how they need help in in raising that money

and so you this becomes a cost-benefit analysis and you got your particulars and you figure out how much it’s going to cost you and you say okay that makes sense great let’s talk about politics because

it’s always a common curiosity or even concern of what i have a final six be what I was the biggest around for about eighteen hundred years whatever that number is and yet crowdfunding the living around for a few so why is

suddenly files that would be legal to do online and what changed right and then why is it legal what what do we have to do to keep it or make it legal let’s just talk about that for a second

so if i have a 560 offering how does it happen that have been a portal to be quote legal and what makes it legal yeah so there and I get this question periodically as people are starting platforms and there are still no such

for something real estate side there are platforms that are still operating under her still that shows to operate under 506 B and you know for tonight we’ll talk to me the benefit of that in a second but 506

B is basically an exemption it’s a it’s the safe harbor and a regulation d for private offerings the Securities acts 42 says that any offering that’s not a public offering is exempt and that created all sorts of confusion into this

case law about will kill well what criteria needed to be meant to be a private offering under way too so they introduced the safe harbor under Regulation D which is five or six or you know 50 for 50 55 60 degrees five or six

and then the JOBS Act Delaney is basically Swift 506 in the 506 B and C 506 B is again a private offering and it and is it an exemption from registration under 506 B you cannot generally solicit that’s the did the key difference

between the final 16 finalists see so what does that mean if I’m have without a platform that means you can show your deals on your your site to the general public so you get to claim your platform you cannot claim the deal on your

platform we so and here’s what most here’s what people do is you’ll go you’ll go to a platform you’ll see you’ll see examples of deals that they have on there but they don’t third there are no terms can’t you’ll see a picture

of you maybe you see a picture is blurry died you know I’ve seen people blur out a picture or not have a picture at all and it might say you know multi-family multi family housing in Texas ok

based on that you’re not really offering you kind of have some ideas of what it is but you don’t have any did that’s and again that sort of this slippery slope gray area that that we get asked to push all the time but those websites those

platforms do is under 506 B you have to establish I think we’ve talked about this previously a pre-existing and substantive relationship with the investor who had the registry interrupt his registration equal relationship so

and so if you ask what changed they were the series of no action letters from the SEC that that were have been you know come out over the last several years and they provided some guidance and really said we’re not going

to going to focus on you know we’re going to look at this kind of a case-by-case basis but pre-existing and we’re going to focus on the substance issues in there was always this timeframe what is how long is that

pre-existing is it 30 days 45 days 60 days what they said is where it focus more on the subject of relationship to a lot of times people to answer your question you’ll go on your register with that

site you still you’re not immediately given access to the heels that’s when the time clock starts okay what some people do there’s contact there might be a telephone callers an email there’s this this series of of

things that the issuer to the platform does your does to develop that preset substantive relationship once that’s been established based upon you know combination of time and and contact substance that person then you can view

the deals to view any deals going forward from that time they can’t invest in fields that were existing prior to this that relationship being started that they can invest ability to come after that if i go live with the bill

today someone walks through the door next week under fire within the guidelines that your interpretation you cannot invest might be able to have to be the next deal yes absolutely and that’s that something

can I talk to other securities lawyers in this image space about that and it is something I I was hoping and and we had one client that we were we didn’t go down the ground asking for a no-action letter because I talked enough people to

realize that was going to shoot out but i thought well maybe there’s an argument that you know that you might be able to you know the offering means the offering to that person and it’s one that they can see it you know you didn’t make any

offering to that person but I’ve been told that uh you know by a few people the weight and said no offering means just the offering in general so because there’s you might have been able to hear about it from a friend or something like

that so anyway so that’s what does the 50 60 50 60 obviously you can show the deal you can 560 you can have to do all the terms up anybody can see it the limitation though is not only a credit vesture in both cases I think both cases

Billy although 560 you can have up to 35 non-accredited investors i think most platforms are only accepting accredited investor the big difference there is under five succeed you have to you have to prove the European the credit

investor either have to use an outside verification source for us to come the issuer has to do receive tax returns or a letter from their counter their attorney or or financials or something that the troops there they’re credited

whereas under five or 6p they’re always been checked the box and accredited investor and that’s sufficient clear the trees speed camera the US company use ready plus if they have or will have a significant part of business

internationally so does the amount of business do internationally influence their ability to raise money in the US now that should be an issue the longer you want a us-based company because it’s the u.s. exemption applies

to us company so that’s a good question if a broker-dealer portal is raising money from funds from several states under cheer 1r2 required to give notice that each state also so that I guess

it’s a regular plus there’s a broker-dealer portal raising money funds from the several states under the tier 1 r is it required to give notice each state and also go through the required coordinated registration process

yes so but but these are all the reasons why you’re not going to tier1 and you’re likely going to be here too if you don’t you plus that’s what I would that’s what i would suggest cheer with the main difference between 21 into your tutor 1s

dollar limitation but that the biggest difference is just that under a tier-one although you do not need to you’re not required to provide audited financials which maybe to some people that’s prohibitive

you are required to provide notice my links and not only noticed i think you’re retired required to coordinate registration with each state beer conducting the offering in which that is not time consuming the nightmare know I

know they’re trying to make it so that the nes a national anyone this the state securities association is trying to you know there’s been discussion about coordination of registration I don’t know how well that’s working and I know

I’ve never personally tested that I think it’s you’re going to spend a lot more time and money trying to do that then you would just going and getting an audit on your financials yeah so I mean that something that can

be chaotic can be done while you’re working on your 1a and and working on that filing whereas you know if you’re trying to coordinate that registration and get approved by each state each state’s coming back with comments it

it’s a nightmare yeah all the general sense the three-part talk to is scripture one good review tier 2 or don’t use regular plus it’s not big build and then go Rexie up already because he’d just doesn’t fit

yeah it’s here is a question you’re you’re building a portal title two offerings for the next six to 12 months you eventually plan to go to title three later or xef can you have and I guess you only do five or six see

you have a non-accredited investors reddit investors register with the premise to let them know that you’re going to have opportunities for them later is there any law that prohibits unaccredited investors from registering

on your portable I think that would be ok because what you’re as long as long as those issuers were some of the issues are different you know where I think you could get into trouble is you have no one accredited investors you have you

know an issuer to explain to an offering for their company and they start their 50 60 campaign they’re gathering all these these names of these people and then soon as the platform stop say they started Rex es su papa was already there

they’re going to wreck the ribbon through the portal is the portals collecting the names and registrants not the issuer right and so even if been accredited investor gives you money thinking relied on their credit ation

everybody signed the paper whatever it is unless you break a square that’s not breaking the law right you could return the money but hey you’re not accredited the hotel and then eventually you’re gonna go to the rec CS process it

approved for extra of the question is is there any liability for damages having all these are credited esters on your portal that you naturally attracted through your file six feet general solicitation and I think that’s nothing

that’s okay i mean other people get that you know there’s been a few as the platforms that we’re doing 50 60 and then they you know developed a habit a database of all people have registered and their marketing those people now I

don’t think there’s any problem with that i guess it where I was going with that it’s issue it’s more an issuer concerned that you’re not using a 506 C to condition the market or local to do you know

test the waters before doing a wreck CF offering that’s where i would be more concerned yeah so if you’re going to ensure level but none of the four levels one of the issuer’s aren’t manipulating yeah different offerings that you’re

fine but if it’s if it’s looks like a masquerade for an issuer to you the loopholes that you might be in yeah and in the crossfire it and you know that being said you know it is possible to do it you know 50 60 officer initiated go

do a bible 60 offering and then subsequent break CF offering it just has to be some sort of cooling down period you know you want to be careful not to to do one to be resting upright on the back of the right 506 C just because you

know again that this the pre offering communication that doesn’t get integrated and learned that question is we are essentially a real estate equity indicator not a broker-dealer and we’ve filed whatever we need to file on the

blue sky laws then what do we need to do differently legally speaking if anything to operate crowdfunding platform a offering from 60 or be opportunities online so let’s talk about Venus indicates for equity real

estate they’re going to file with the state so the blue la do you explain that for everyone to come and join us and I actually love hearing from groups like that because they they’ve been doing this right this is something I fully

understand your real estate guys are going to in syndication I what I tell them is that this is just the natural feel technological progression of their business they don’t have to do a lot different at all with

respect to what they’re doing they just have to you know again they’re they’re providing disclosure MIT I presume that providing disclosure materials when they’re doing those those indications so they’re compliant with final six they’re

finally they’re blue sky filings which you need to you know do under 506 B or C so that’s that’s the same you know I the only thing I would say is that if they’re doing an offering and a 50 60 years or be that they’re not you know

mixing those two open with respect to how they’re promoting those deals but you know guys that are doing real estate syndication under its it’s an easy conversation and understanding to go to craft something

because really all crowdfunding is it’s doing what you’re doing before you’re just doing it on the Internet great thank you if you’re only doing tile two offerings you still need to reserve your name with the FCC if not

how do you ensure that your name is reserved he did not need to reserve your name with the sec if you’re getting title two offerings and he actually rather than a month since with 10 residents do you

have to do that on a title three or four xes let me like restructure the question I think those are asking I’m XYZ company incorporated rxyz portal and right now i’m only two entitled to I plan in the future to do rags CF when

is it appropriate for me to register so on foot cop punches in the registers with FINRA XYZ before me even though i have my title to portal is my title 24 reserve my title 3 now spotlight and that’s I think the question is if you

plan to do a red GF portal simple yet you it is up for grabs until you reserved it yeah and-and-and the nice and so you reserved it and then you have 120 days to to take certain steps with cinder and

that doesn’t mean you have under 28 the cum of a total or even file what I’ve learned or even file your you’re a format pmma you have to do you know take certain steps to become registered with listing or not approved but yeah so i

would suggest if you plan to do it in the in the future it go ahead and reserve that name sooner rather than later otherwise if you’re just going to be a 506 C platform at you protect that

trademark laws are there to protect you know to protect your good will and the naming that so if you’re raising money you have a startup that want to leverage regular plus and they don’t have any books to all

it is here too still an option yes why you know there’s playing start upstairs you can still get in on it even if you don’t have even if you have no assets that you know even if they’re auditing and checking account has a few hundred

dollars and you can still get in on it i’m doing i’m working with a few companies now that they’re brand new real estate funds and they you know all the all the others are offering and their checking accounts yeah i believe i

saw one that their their bank account was seventeen dollars yeah upon approval there is clearly no assets in the company but yet they’re still approved so absolutely if you do a 56 be offering and therefore need a

30-day cooling-off period can investor register on your portal see the actual deal and then invest in a deal after three days I think we already answered this so let me see if I could answer it directly so as my said 506 B deal to his

interpretation if the relationship started after the gills are even posted a pilot’s be that person would not be allowed to participate in that offering it be the next offering on the portal of the offering that they would have the

ability to Dustin also i believe the letters from the SEC no longer require a 30-day cooling-off period either because i’m not using that as the measure of social relationship correct yeah and again it wasn’t the

clarification is that they’re not there is no bright line to say it’s 35 30 days or 45 days I still I still recommend that it still think it makes sense because you have this pre-existing relationship

the longer that relationship is I think the better that’s going to vote for you but they keep a question there is he’s got offerings on your site you know and I galanis an investor there needs to be some sort of period of time and it’s not

miss its sort of it you know get to know you so period let’s find this out so let’s say you have a portal that decides to push up they have a cool off period of 24 hours they let someone in a

deal that was already posted when they had it they take their money billion deal funds everything everyone’s high-fiving each other hooray investors happy issues happy what happens when it wouldn’t fall apart when

does that one do when do find it went to answer this class find it send people to jail I don’t know I you know I’m going to get on that point might be a little extreme but let you know I guess that the risks

are ok so one of the biggest risk there is that they blew their exemption they brought they allowed somebody in that they didn’t have a a pre-existing relationship lip so they blew their exemption from registration which means

what which means they just offered secure day off they had an unregistered securities offering which know again is against the law most likely what would happen if

everybody was all like you said high-fiving the deals good and everybody gets paid back most likely nothing’s going to happen the SEC doesn’t have the time or resources to go and try to police every

single deal but let’s take that let’s put way me what it is they’re losing money exactly man now that it gets really really fun yeah that’s where that’s when I in trouble because now the investor

says pay you had an unregistered securities offering and you brought me in under this under sister is offering and you didn’t comply with what you said now the investor has a cause of action against that issuer with the other

investors have a cause of action be with and so not only do you risk one investor but now you what with 3200 about 21,000 dusters good your attention and oh yeah and and say the typical remedy there is a rescission so basically it’s okay you

have to give me my money back plus you know some sort of reasonable interest that I could have earned on that so now you know you and everybody’s high-fiving videos good you know and now you’re having to figure out how do i get these

people back 45 million and those already spent your bank account anymore yeah and I have to scratch full of okay even if I liquidate the app that it might not be ready to be liquid it might

be you only work three going on the market now and no you have real problems yeah and it’s absolutely to the SEC gets they felt they get involved with the state and they say huh ok we’re here to protect the investors

so then you know the SEC specifications and defines and so forth so that’s the parade of horrible sister the longest in a very real way unfortunately nothing happens immediately yeah it just has a very long tail of

liability and so even though you might be high-fiving all the way to the bank for the first six to 12 months typically when there’s a bump in the deal and the investors get excited they’re looking for the loophole to get their money back

and unfortunately you’re in your rush to get funded you gave him the loophole to really potentially take advantage of you yeah because even though they’re the ones begging to get into the first place look the other way let me in let me in

now they’re holding you responsible for you being nicer or stretching your own more guidance yeah exactly you know there was a an attorney i worked with my first our crime scene he said you know so many

people in sure they fall they fall is a good deal exemption need to kill those well you know if he doesn’t your yeah you can do a lot of things wrong and it comes out but the second something goes bad the investors and more importantly

the plaintiff’s attorney attorney think they’re going to try to find out where you screwed up and that’s why it’s important that you do follow the steps the following will you know that’s why you have that’s why it’s important that

you have no disclosure material that you talk about the risks you talk about the deals because that’s you know that’s an insurance policy for use it can go back to the syndication question exposure disclosing those deals you know whether

2506 fear i want to see yelagiri exploding those risks and and and the information that you’re doing that to protect yourself quite frankly this is one of the major reasons why we’re having this webinar is to educate

people on the realities of raising capital securities in the US and the things they have to be careful load and so they can configure their portals and manage their business appropriately stay clear of the problematic areas and so

well every individual has the ability to make bad choices even the rush to get something funded it will typically in the end not serve you well because eventually something was gonna go wrong somewhere and then it quickly unraveled

and that’s what we all want to avoid that’s it for this this month’s webinar Marty thank you for coming down and visiting with us if you had a question that did not get out please feel free to email me directly or indirectly will get

that answer for you in a couple week and have a great week yeah thnkx for figure

November

0:00:12.960,0:00:21.750

welcome everyone to the legal hour with

0:00:19.410,0:00:26.400

Marty tate

0:00:21.750,0:00:28.859

i’m your host Brent Brague from crowd engine we

0:00:26.400,0:00:31.019

have the luxury to today with talking

0:00:28.859,0:00:33.780

with Mary Tate and welcome everyone on

0:00:31.019,0:00:35.700

we also want to welcome each of you our

0:00:33.780,0:00:37.320

listeners different than many webinars

0:00:35.700,0:00:39.840

your listeners are actually active

0:00:37.320,0:00:44.010

participants in today’s webinar where

0:00:39.840,0:00:48.239

you’ll have the opportunity to ask your

0:00:44.010,0:00:50.039

questions to Marty what the actually

0:00:48.239,0:00:54.210

industry chatter and what questions you

0:00:50.039,0:00:57.120

may have about different legal questions

0:00:54.210,0:01:01.320

you have regarding your different races

0:00:57.120,0:01:03.329

different portal questions you may have

0:01:01.320,0:01:06.390

whether it’s with different regulation

0:01:03.329,0:01:08.820

types or other things you may have as

0:01:06.390,0:01:13.650

far as the setup of a a given portal

0:01:08.820,0:01:15.450

which you may be facing Marty when you

0:01:13.650,0:01:18.869

go ahead and introduce yourself

0:01:15.450,0:01:23.189

I know Marty has been the top people

0:01:18.869,0:01:25.770

securities lawyer past 17 years in is

0:01:23.189,0:01:29.369

currently will work for me where ya

0:01:25.770,0:01:32.070

brain I practice multiple times before

0:01:29.369,0:01:35.220

but apparently he just punted uh I’m

0:01:32.070,0:01:39.000

partner without Karman line off Israel

0:01:35.220,0:01:42.390

and our local a I guess regional

0:01:39.000,0:01:45.270

boutique corporate securities finance

0:01:42.390,0:01:48.030

transactions law firm

0:01:45.270,0:01:52.979

yeah but I’ve been not doing security

0:01:48.030,0:01:56.280

slots for about 17 years specialize in

0:01:52.979,0:02:01.619

public and private finance and

0:01:56.280,0:02:05.159

crowdfunding great so first off there’s

0:02:01.619,0:02:07.170

been little bit of a shake-up in the a

0:02:05.159,0:02:08.700

couple things interesting things in the

0:02:07.170,0:02:11.540

past couple weeks

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outside of the election uh

0:02:11.540,0:02:18.439

sec chair step down this week which

0:02:15.620,0:02:20.780

gives a little bit of excitement and the

0:02:18.439,0:02:23.569

fact that the SEC he’s really been

0:02:20.780,0:02:27.349

focused on three not the industry i

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think most observers have noted and now

0:02:27.349,0:02:32.720

with the new administration there’s a

0:02:29.599,0:02:35.180

little bit of chatter that a new

0:02:32.720,0:02:39.680

appointments might have a little more

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focused on entrepreneurship and a little

0:02:39.680,0:02:44.359

bit more FinTech friendly so be excited

0:02:42.620,0:02:47.239

to see the direction the new

0:02:44.359,0:02:50.329

administration takes that and so while

0:02:47.239,0:02:52.099

we looking for those direction care

0:02:50.329,0:02:55.220

whether it’s going more this framework

0:02:52.099,0:02:57.919

actual new direction and then Marty want

0:02:55.220,0:03:01.280

you to tell us about announcements that

0:02:57.919,0:03:03.019

happened in October 26 with the election

0:03:01.280,0:03:06.919

i think other cops on the road for

0:03:03.019,0:03:09.620

people outside in 34 but for those lists

0:03:06.919,0:03:12.590

in addition the changes that of the

0:03:09.620,0:03:14.689

guidelines that were made to the

0:03:12.590,0:03:18.109

regulations

0:03:14.689,0:03:20.989

yeah so actually comment on your first

0:03:18.109,0:03:23.269

things first I think it’s it having the

0:03:20.989,0:03:24.139

Commissioner of the SEC steps yeah I

0:03:23.269,0:03:25.190

think that’ll be

0:03:24.139,0:03:26.659

I think it’d be interesting i know

0:03:25.190,0:03:32.629

there’s a lot of excitement about it

0:03:26.659,0:03:36.889

there’s was a lot of that you know it

0:03:32.629,0:03:38.599

does in the industry felt the SEC drag

0:03:36.889,0:03:42.979

their feet a little bit they weren’t as

0:03:38.599,0:03:47.150

entrepreneur or company friendly issuer

0:03:42.979,0:03:49.519

friendly is is many hoping i don’t know

0:03:47.150,0:03:50.780

why but i think that a sure why I think

0:03:49.519,0:03:54.560

that you did a good job and I think

0:03:50.780,0:03:57.079

it’ll be yeah it’ll be interesting to

0:03:54.560,0:03:59.389

see what changes happen on the the

0:03:57.079,0:04:03.949

second issue the you brought up

0:03:59.389,0:04:08.810

regarding uh on october 26 there the

0:04:03.949,0:04:14.780

final rules came out for the amendment

0:04:08.810,0:04:16.190

to rule 147 and what this was is I think

0:04:14.780,0:04:17.870

it’s a really good thing this was

0:04:16.190,0:04:19.969

actually they they said they were going

0:04:17.870,0:04:22.099

to do this a year ago when they issued

0:04:19.969,0:04:24.500

it was sort of a sub note when they

0:04:22.099,0:04:30.350

shoot the final rules for writing

0:04:24.500,0:04:32.870

station for Rexy f but what 147 is it

0:04:30.350,0:04:35.360

based in it works in conjunction with

0:04:32.870,0:04:40.040

right d 504 and it’s a safe harbor for

0:04:35.360,0:04:43.640

its basically federal exemption safe

0:04:40.040,0:04:47.840

harbor for intrastate offerings

0:04:43.640,0:04:50.000

however a lot of people it with

0:04:47.840,0:04:56.810

crowdfunding there was a lot of a

0:04:50.000,0:04:59.780

incongruencies i guess you could say

0:04:56.810,0:05:04.460

because the way that interstate

0:04:59.780,0:05:09.169

crowdfunding work basically a little

0:05:04.460,0:05:14.330

background on that in 2014 there was a a

0:05:09.169,0:05:15.950

CID written her it was a compliance and

0:05:14.330,0:05:18.110

disclosure interpretation provided by

0:05:15.950,0:05:20.000

the SEC they basically said if you’re

0:05:18.110,0:05:24.080

going to do an intrastate offering and

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at the time there was like 12 states

0:05:24.080,0:05:29.330

that had passed intrastate crowdfunding

0:05:26.180,0:05:31.550

exemptions they basically said that’s

0:05:29.330,0:05:37.820

fine but in order to comply with rule

0:05:31.550,0:05:40.729

147 that offering has to take you can’t

0:05:37.820,0:05:44.030

offer that they’re offering us to be

0:05:40.729,0:05:48.229

holy contained within the state which is

0:05:44.030,0:05:49.520

you can imagine anybody doing any sort

0:05:48.229,0:05:51.380

of offering with the internet that

0:05:49.520,0:05:53.090

became challenging i know that people

0:05:51.380,0:05:55.610

try to work around it by basically

0:05:53.090,0:05:58.370

saying you’re having people qualify for

0:05:55.610,0:05:59.690

example in Texas I’m Texas resident you

0:05:58.370,0:06:03.200

couldn’t see anything unless you

0:05:59.690,0:06:05.810

verified that but again it basically

0:06:03.200,0:06:11.780

made it really difficult for intrastate

0:06:05.810,0:06:14.330

crowdfunding people to do interstate

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crowdfunding offerings using the

0:06:14.330,0:06:21.380

internet so 147 essentially the big

0:06:17.930,0:06:27.140

thing it did it in addition to you know

0:06:21.380,0:06:32.120

increasing what you can do under Rule 54

0:06:27.140,0:06:35.060

25 million it also the big deal is that

0:06:32.120,0:06:36.650

it it basically said they were ok if you

0:06:35.060,0:06:37.910

do an interstate offering using the

0:06:36.650,0:06:40.790

internet where ok AFP

0:06:37.910,0:06:44.600

we’ll see it you just have to make sure

0:06:40.790,0:06:47.240

that you all you limit the actual

0:06:44.600,0:06:49.370

investors to investors within that state

0:06:47.240,0:06:51.380

so if you’re in Texas or one of the

0:06:49.370,0:06:53.750

other 35 states that has an intrastate

0:06:51.380,0:06:59.120

exemption you can do an intrastate

0:06:53.750,0:07:07.760

crowdfunding offering and it will comply

0:06:59.120,0:07:10.310

with 1-1 4747 a even if you know anybody

0:07:07.760,0:07:12.140

can see it on the internet so that was a

0:07:10.310,0:07:16.340

big changed and one thing just to keep

0:07:12.140,0:07:19.100

in mind with that friend is that even

0:07:16.340,0:07:23.570

under 1147 you still have to comply with

0:07:19.100,0:07:27.350

each state’s requirements and so which

0:07:23.570,0:07:30.320

mayor in that that’s why it was sort of

0:07:27.350,0:07:32.060

met with a hurry and not a big deal

0:07:30.320,0:07:34.640

because each state has their own

0:07:32.060,0:07:37.970

requirements in now with regulation CF

0:07:34.640,0:07:43.640

with 506 C offerings with these federal

0:07:37.970,0:07:47.000

crafting exemptions it it’s almost

0:07:43.640,0:07:50.240

easier just to go the federal route and

0:07:47.000,0:07:51.560

not let yourself to one state but so as

0:07:50.240,0:07:52.880

much ado about nothing

0:07:51.560,0:07:54.290

I don’t know if it’s much ado about

0:07:52.880,0:07:56.450

nothing i think there would be

0:07:54.290,0:07:58.730

circumstances where you could say hey

0:07:56.450,0:08:03.350

we’re going to offer this to say and I

0:07:58.730,0:08:04.790

think even smaller offerings you know if

0:08:03.350,0:08:07.310

you’re if you’re really just going to

0:08:04.790,0:08:10.580

try to generate if it’s a local business

0:08:07.310,0:08:16.040

or or something the Richard short that

0:08:10.580,0:08:17.480

Peter local pizzeria example that wants

0:08:16.040,0:08:20.780

to raise money they might want to do

0:08:17.480,0:08:25.220

that under an intrastate exemption

0:08:20.780,0:08:27.740

because maybe the limitations on

0:08:25.220,0:08:31.250

investor investor limits might be less

0:08:27.740,0:08:33.680

or not as owners as a wreck CF offering

0:08:31.250,0:08:36.349

but I don’t think it’s much i think that

0:08:33.680,0:08:38.390

your securities lawyer can counsel you

0:08:36.349,0:08:42.650

on that and and what would be best but

0:08:38.390,0:08:48.320

it gives another arrow in the quiver I

0:08:42.650,0:08:50.660

guess sure we have a David asked would

0:08:48.320,0:08:53.060

it be possible to list an interesting

0:08:50.660,0:08:56.990

and a title three offerings on the same

0:08:53.060,0:09:04.100

portal at the same time of course using

0:08:56.990,0:09:09.620

the crowd engine technology course let

0:09:04.100,0:09:13.520

me think about that the it really will

0:09:09.620,0:09:19.190

depend upon the state you’re in the reg

0:09:13.520,0:09:21.080

CF one of the things that i think it’s

0:09:19.190,0:09:22.940

it’s tricky i’m just trying to like do

0:09:21.080,0:09:24.890

this sort of mental mashup of that

0:09:22.940,0:09:26.240

because what you would be doing is

0:09:24.890,0:09:29.060

you’re using this sort of general

0:09:26.240,0:09:34.160

solicitation to get everybody i suppose

0:09:29.060,0:09:37.130

you could have some sort of bifurcation

0:09:34.160,0:09:40.520

of the landing page where you say you

0:09:37.130,0:09:42.950

know I’m a Texas resident or I’m a

0:09:40.520,0:09:44.720

Minnesota resident and and that would

0:09:42.950,0:09:48.650

take you to offering materials that were

0:09:44.720,0:09:50.960

strictly compliant with that interested

0:09:48.650,0:09:54.860

offering and then for everybody else

0:09:50.960,0:09:58.250

they could be sent the other way but i

0:09:54.860,0:10:00.170

think that that really blurs Alliance

0:09:58.250,0:10:04.790

there because you’re the one the other

0:10:00.170,0:10:06.770

thing is you obviously your xef offering

0:10:04.790,0:10:09.980

has to be done through a licensed portal

0:10:06.770,0:10:12.650

so how would that be different than a

0:10:09.980,0:10:17.209

regular plus offering anorexia for free

0:10:12.650,0:10:19.160

at how good-looking I don’t do we know

0:10:17.209,0:10:20.690

is also probable that I’m conceal what

0:10:19.160,0:10:23.360

I’m what I guess I would be concerned

0:10:20.690,0:10:25.970

that this year’s your state under Rule

0:10:23.360,0:10:30.680

147 I suppose it would be okay again

0:10:25.970,0:10:35.150

it’s it really is based on says you can

0:10:30.680,0:10:36.680

you advertise to to the whole world you

0:10:35.150,0:10:39.230

just have to make sure that your

0:10:36.680,0:10:42.440

investors are only within that state so

0:10:39.230,0:10:48.170

how do you keep those two things

0:10:42.440,0:10:49.850

straight under a reggae plus and a is

0:10:48.170,0:10:51.709

what I love coming here and just get put

0:10:49.850,0:10:55.910

on the spot right out of the gates good

0:10:51.709,0:10:58.250

but under a plus and it

0:10:55.910,0:11:01.820

simultaneous radio plus in it and

0:10:58.250,0:11:04.370

a wreck CF offering you’re not limited

0:11:01.820,0:11:09.140

to with one state right you’re able to

0:11:04.370,0:11:10.880

offer to everybody so and with in the

0:11:09.140,0:11:12.380

tricky thing about that is obviously

0:11:10.880,0:11:16.940

your timing because you can’t test the

0:11:12.380,0:11:18.950

waters on the link CF and that has its

0:11:16.940,0:11:22.100

own although you said its Pato we

0:11:18.950,0:11:26.180

established as possible it still is is

0:11:22.100,0:11:29.510

difficult i suppose that you could you

0:11:26.180,0:11:32.930

could do it you just have to its

0:11:29.510,0:11:35.570

navigate through both both rules and

0:11:32.930,0:11:39.830

federal role to configure your project

0:11:35.570,0:11:45.590

template on crowd engine to not accept

0:11:39.830,0:11:49.160

yeah yeah investments outside your state

0:11:45.590,0:11:53.510

on your interest eight deal to stay

0:11:49.160,0:11:57.920

compliant on those investments and then

0:11:53.510,0:11:59.900

to have your regulation CF so our

0:11:57.920,0:12:02.750

template to those standards

0:11:59.900,0:12:04.460

potentially yeah so they gave me up mail

0:12:02.750,0:12:06.410

while for it so let’s presume you’re

0:12:04.460,0:12:09.560

let’s presume your platform right so

0:12:06.410,0:12:15.020

you’re you’re at licensed portal with

0:12:09.560,0:12:19.820

with FINRA and the sec I suppose you

0:12:15.020,0:12:23.120

could say the that certain aspects of

0:12:19.820,0:12:24.830

that platform were operated by your

0:12:23.120,0:12:29.180

license intermediary that we’re doing

0:12:24.830,0:12:32.330

the CF offering and then you nice pose

0:12:29.180,0:12:35.810

you can have simultaneous offering their

0:12:32.330,0:12:39.290

it’s just again you have to can its

0:12:35.810,0:12:41.089

technology combined legal to try to make

0:12:39.290,0:12:42.770

that work

0:12:41.089,0:12:45.260

i’m also thinking you know what if you

0:12:42.770,0:12:47.900

just did this you have your xef offering

0:12:45.260,0:12:50.150

going over here on and then on your

0:12:47.900,0:12:54.860

website you had you know an interstate

0:12:50.150,0:12:57.290

offering kind of a single rays which is

0:12:54.860,0:12:59.810

something I I suppose you could do again

0:12:57.290,0:13:03.110

you just have to be really careful

0:12:59.810,0:13:06.440

maybe there’s other security lawyers

0:13:03.110,0:13:08.900

around the country there screeching

0:13:06.440,0:13:11.810

brakes but I I suppose it could be done

0:13:08.900,0:13:15.200

just would have to have to think

0:13:11.810,0:13:17.660

about the best way to do that it is an

0:13:15.200,0:13:18.950

interesting question coming from the

0:13:17.660,0:13:22.190

film industry

0:13:18.950,0:13:24.440

okay what are the changes or benefits to

0:13:22.190,0:13:27.500

changes in the regulations in regards to

0:13:24.440,0:13:31.430

platforms that produce multiple domestic

0:13:27.500,0:13:34.460

and international film projects so

0:13:31.430,0:13:36.290

energy or the changes are benefits and

0:13:34.460,0:13:38.180

changes that regulations in regards to

0:13:36.290,0:13:43.640

platforms that produce multiple domestic

0:13:38.180,0:13:45.440

international film projects it so let’s

0:13:43.640,0:13:47.150

look at a film project is not being any

0:13:45.440,0:13:51.740

different than any other issue right

0:13:47.150,0:13:58.190

correct as long as you’re you know I i

0:13:51.740,0:14:00.290

I’m actually had way back to begin my

0:13:58.190,0:14:03.290

career I worked with a few studios and

0:14:00.290,0:14:07.400

had those clients so every film has its

0:14:03.290,0:14:11.029

is obviously its own entity you your

0:14:07.400,0:14:15.140

for- we use the term SPV a lot special

0:14:11.029,0:14:17.210

purpose vehicle for that film so the if

0:14:15.140,0:14:19.640

you’re having multiple films that you’re

0:14:17.210,0:14:25.550

trying to fund i’m obviously

0:14:19.640,0:14:26.630

crowdfunding could help and whether

0:14:25.550,0:14:28.339

you’re trying to raise less than a

0:14:26.630,0:14:31.220

million under xef or you’re trying to

0:14:28.339,0:14:35.720

raise 10 million under 506 C or you’re

0:14:31.220,0:14:40.130

trying to race you know you could also

0:14:35.720,0:14:42.680

you could also raised money for a

0:14:40.130,0:14:47.030

variety of films under like a reggae

0:14:42.680,0:14:49.130

offering as well so so that’s how I

0:14:47.030,0:14:51.589

think it opens the floodgates when you

0:14:49.130,0:14:54.080

think about i’m watching a trailer in a

0:14:51.589,0:14:56.420

movie and right there i could open up my

0:14:54.080,0:15:00.020

smartphone and then vast and go from

0:14:56.420,0:15:02.750

being a fan to an investor to an

0:15:00.020,0:15:05.510

ambassador so whether i’m watching an

0:15:02.750,0:15:08.750

action film or whatever my drama film a

0:15:05.510,0:15:11.270

choice is and whoever my stars of choice

0:15:08.750,0:15:14.240

are there are fans of I now can

0:15:11.270,0:15:16.370

participate on a much more dynamic level

0:15:14.240,0:15:18.650

it’s just going to the movies i can now

0:15:16.370,0:15:20.040

drop from dropping twenty dollars for a

0:15:18.650,0:15:21.899

bucket of popcorn

0:15:20.040,0:15:24.360

I could then arguably drop a couple

0:15:21.899,0:15:26.699

dollars and actually potentially even

0:15:24.360,0:15:30.779

yield a profit from going to the movies

0:15:26.699,0:15:34.290

i think the opportunity for investors

0:15:30.779,0:15:37.829

grows quite rapidly especially when you

0:15:34.290,0:15:40.050

have the potential to profit from you

0:15:37.829,0:15:41.730

when you look at all the film’s you’re

0:15:40.050,0:15:45.509

probably not going to get your hands on

0:15:41.730,0:15:47.730

Star Wars or blockbuster like Titanic we

0:15:45.509,0:15:50.399

talked about all the other independent

0:15:47.730,0:15:52.560

movies that have a potential of getting

0:15:50.399,0:15:55.199

big i think there’s a lot of opportunity

0:15:52.560,0:15:57.329

for filming in particular if you could

0:15:55.199,0:16:00.329

land some names and or some popular

0:15:57.329,0:16:04.769

titles out there in front of people on

0:16:00.329,0:16:06.120

that will win and it’s really not i mean

0:16:04.769,0:16:07.529

they’re doing it already obviously

0:16:06.120,0:16:09.899

there’s been a lot of films that have

0:16:07.529,0:16:16.889

been funded through Kickstarter

0:16:09.899,0:16:20.339

IndieGoGo and so that’s not that’s not a

0:16:16.889,0:16:22.470

new thing now what it does is instead of

0:16:20.339,0:16:24.300

I i like your idea to I think that’s

0:16:22.470,0:16:27.510

what would be pretty amazing to be able

0:16:24.300,0:16:30.089

to say hey i saw this trailer online and

0:16:27.510,0:16:31.920

invest now and you not only can help

0:16:30.089,0:16:35.130

fund the project you can participate in

0:16:31.920,0:16:38.160

the profits if it’s successful so yeah

0:16:35.130,0:16:42.750

it’s be like you said a lot of

0:16:38.160,0:16:44.880

opportunities there so indigogo just

0:16:42.750,0:16:48.240

announces their in the game for equity

0:16:44.880,0:16:50.430

crowdfunding big splash this week

0:16:48.240,0:16:52.829

what are your thoughts in general Marty

0:16:50.430,0:16:55.380

about that and I think it’s great i

0:16:52.829,0:16:56.130

think that i think it was a matter of

0:16:55.380,0:16:58.889

time

0:16:56.130,0:17:00.690

yeah I know that Kickstarter is still

0:16:58.889,0:17:03.990

holding strong saying they’re not going

0:17:00.690,0:17:06.929

to throw their hat in the ring but we’ll

0:17:03.990,0:17:10.620

see that I think it’s great we are from

0:17:06.929,0:17:12.929

actually helped one of their first offer

0:17:10.620,0:17:15.510

ease prepare their documents and so we

0:17:12.929,0:17:20.730

were excited to be involved with that

0:17:15.510,0:17:24.689

they were filed on in connection with

0:17:20.730,0:17:27.000

the IndieGoGo going live so Republic

0:17:24.689,0:17:30.510

restorative sits a distillery in

0:17:27.000,0:17:33.390

Washington DC from from the concept of

0:17:30.510,0:17:35.580

all the boats will rise with the tire

0:17:33.390,0:17:38.070

in the end the puck in the Bay or type

0:17:35.580,0:17:39.540

of thing on the harbor then yeah I think

0:17:38.070,0:17:42.840

it’s great for the industry is bringing

0:17:39.540,0:17:45.180

a lot of attention and in its skull

0:17:42.840,0:17:46.590

bring awareness to our industry which i

0:17:45.180,0:17:48.750

think is phenomenal

0:17:46.590,0:17:50.760

it’s an internet so i think all news is

0:17:48.750,0:17:55.140

good news and some of that aspect

0:17:50.760,0:17:58.050

whether IndieGoGo has any magic you know

0:17:55.140,0:17:59.820

pixie dust in the back pocket no but it

0:17:58.050,0:18:00.750

is far as you know why they do anything

0:17:59.820,0:18:03.450

special

0:18:00.750,0:18:05.460

probably not but as far as their ability

0:18:03.450,0:18:07.380

to have a lot of horsepower behind them

0:18:05.460,0:18:09.990

sure I think they have a great marketing

0:18:07.380,0:18:12.600

engine and so I do you think they’ll do

0:18:09.990,0:18:14.370

a lot of good as far as that but i think

0:18:12.600,0:18:16.890

everyone who’s looking to jump in the

0:18:14.370,0:18:19.920

game i think they’re gonna bring a lot

0:18:16.890,0:18:21.810

of weariness and I think a lot of boats

0:18:19.920,0:18:23.280

will rise with the time because of indie

0:18:21.810,0:18:25.980

go-go so I think it’s great

0:18:23.280,0:18:27.990

from that aspect and I i think that it’s

0:18:25.980,0:18:30.210

again like you said they’re not doing

0:18:27.990,0:18:33.180

anything that’s that’s that over the

0:18:30.210,0:18:35.730

unique other than I think it’s what’s

0:18:33.180,0:18:37.320

really cool is there off their you have

0:18:35.730,0:18:39.960

this sort of donation perk space

0:18:37.320,0:18:42.270

reward-based crowdfunding that’s

0:18:39.960,0:18:45.540

happening right alongside of equity

0:18:42.270,0:18:47.850

crowdfunding which i think is I think

0:18:45.540,0:18:51.480

that’s great so I think where you’ll

0:18:47.850,0:18:53.910

wear you know what I hope is like you

0:18:51.480,0:18:55.830

said that all boats will rise the i’m

0:18:53.910,0:18:57.810

working with a number of different

0:18:55.830,0:18:59.400

platforms that are working through the

0:18:57.810,0:19:02.520

process now and they’re they’re really

0:18:59.400,0:19:05.580

specialized so it’s not just hey let’s

0:19:02.520,0:19:08.670

go invest it’s not what you’re going to

0:19:05.580,0:19:11.970

find on a leaf under start engine these

0:19:08.670,0:19:16.050

are companies that we know a like a

0:19:11.970,0:19:18.240

revenue-sharing model or really

0:19:16.050,0:19:20.760

specified companies which I think that

0:19:18.240,0:19:25.440

will I think that will be beneficial if

0:19:20.760,0:19:27.060

I think it one drawback to a lot of

0:19:25.440,0:19:29.610

sites if there’s if you go on there’s

0:19:27.060,0:19:30.720

under different investment opportunities

0:19:29.610,0:19:33.900

and you don’t really know you’re doing

0:19:30.720,0:19:35.850

it can be overwhelming and I think we

0:19:33.900,0:19:41.880

talked about this last time I yours

0:19:35.850,0:19:43.620

I don’t think as of november 17 people

0:19:41.880,0:19:46.510

are just getting online and saying you

0:19:43.620,0:19:48.940

know hey let me go see what I can invest

0:19:46.510,0:19:52.960

and today I don’t think that’s happening

0:19:48.940,0:19:54.790

quite yet at the yeah i agree that

0:19:52.960,0:19:58.780

there’s a difference between investing

0:19:54.790,0:20:00.250

in buying lottery tickets and I think

0:19:58.780,0:20:02.590

people are going to quickly learn the

0:20:00.250,0:20:07.720

difference and I think it’s good for the

0:20:02.590,0:20:13.210

opportunity in it and it will be fun as

0:20:07.720,0:20:16.720

both as an industry we educate both the

0:20:13.210,0:20:20.230

the investors and as portal owners and

0:20:16.720,0:20:22.750

industries we’re as we teach the the

0:20:20.230,0:20:25.060

world how that works right and there’s a

0:20:22.750,0:20:27.010

difference between a real estate

0:20:25.060,0:20:30.640

investment and a seed investment as

0:20:27.010,0:20:33.880

series around and how risk your money is

0:20:30.640,0:20:36.370

and what your payoff for their rewards

0:20:33.880,0:20:39.580

is right you you’re getting those at a

0:20:36.370,0:20:41.590

t-shirt and golf balls for that hundred

0:20:39.580,0:20:44.440

box and then good luck with that

0:20:41.590,0:20:47.290

vs. you might get a hundred bucks back

0:20:44.440,0:20:50.170

and I there’s a you know and i think

0:20:47.290,0:20:52.000

there’s there will be there is a time

0:20:50.170,0:20:57.310

and place and a space for everything

0:20:52.000,0:21:01.660

there was a a I’m a the bike collector

0:20:57.310,0:21:09.190

and and love to write so like there was

0:21:01.660,0:21:10.870

a really cool anyway sort of specialized

0:21:09.190,0:21:13.870

bike that was being offered on one of

0:21:10.870,0:21:15.310

these crafting sites and I didn’t want

0:21:13.870,0:21:19.540

you know I didn’t really care if i

0:21:15.310,0:21:21.130

invested in the company itself but I

0:21:19.540,0:21:22.540

sure wanted one of those bikes i want to

0:21:21.130,0:21:25.420

be able to be the first one to give up

0:21:22.540,0:21:27.730

his bike so I think that there’s those

0:21:25.420,0:21:29.410

companies that can do pre-sales and and

0:21:27.730,0:21:33.250

rewards I think they’ll always be that

0:21:29.410,0:21:35.740

space good

0:21:33.250,0:21:40.420

the next question is if the portals not

0:21:35.740,0:21:44.770

looking to do any interstate deals is

0:21:40.420,0:21:47.770

the 147 amendment applicable at all to

0:21:44.770,0:21:49.330

the portal no perfect so ya don’t even

0:21:47.770,0:21:50.800

have to worry about it unless you’re

0:21:49.330,0:21:51.220

doing interested it does not apply to

0:21:50.800,0:21:53.290

you

0:21:51.220,0:21:55.090

it really just for those who are trying

0:21:53.290,0:21:55.810

to do interstate it just makes their

0:21:55.090,0:21:57.910

life a little bit

0:21:55.810,0:22:00.040

he’s here really on the technology side

0:21:57.910,0:22:03.430

and the size the offering

0:22:00.040,0:22:07.720

so here’s a kind of great question seems

0:22:03.430,0:22:10.420

like every that there’s a the there’s

0:22:07.720,0:22:12.460

not a clarification of what experts this

0:22:10.420,0:22:14.260

person is looking for but they go every

0:22:12.460,0:22:15.790

time we go searching for an expert the

0:22:14.260,0:22:17.980

first thing that comes out of mouth is

0:22:15.790,0:22:22.570

since five thousand dollars and we’ll

0:22:17.980,0:22:25.900

talk and and so instago is there really

0:22:22.570,0:22:27.820

an expert are are there really any

0:22:25.900,0:22:32.290

experts at this point in the industry

0:22:27.820,0:22:36.100

and so not knowing he didn’t say whether

0:22:32.290,0:22:39.220

it’s an SEO expert or a legal expert or

0:22:36.100,0:22:42.220

another expert for that matter what’s

0:22:39.220,0:22:43.180

your take in general on experts in the

0:22:42.220,0:22:48.040

industry

0:22:43.180,0:22:54.520

um I I think there’s a lot of questions

0:22:48.040,0:22:58.480

obviously think that is you know I I’ll

0:22:54.520,0:23:02.920

speak for myself that I eat I’m i answer

0:22:58.480,0:23:05.170

calls every day every single day without

0:23:02.920,0:23:07.720

taking five thousand dollars at front

0:23:05.170,0:23:11.050

maybe I should change my model there but

0:23:07.720,0:23:13.210

no I think that there are experts i

0:23:11.050,0:23:14.860

think that I mean Brants an expert in

0:23:13.210,0:23:18.160

the field i think that there are a lot

0:23:14.860,0:23:20.170

of experts you go to the crowdfunding

0:23:18.160,0:23:21.400

conferences and people there’s people

0:23:20.170,0:23:23.530

that our experts they’ve been around

0:23:21.400,0:23:26.170

both legal experts there’s technology

0:23:23.530,0:23:30.820

experts there’s a marketing expert so I

0:23:26.170,0:23:31.330

think there are um and I speak for you

0:23:30.820,0:23:35.080

know

0:23:31.330,0:23:36.730

legal experts i know that no I’m happy

0:23:35.080,0:23:39.370

to consult people like said I answer

0:23:36.730,0:23:43.150

questions all day long and I have talked

0:23:39.370,0:23:45.220

about this and yeah the ultimate job

0:23:43.150,0:23:47.260

the ultimate goal for me is to be able

0:23:45.220,0:23:51.250

to help you and provide you know paid

0:23:47.260,0:23:53.050

legal services but i’m happy to answer

0:23:51.250,0:23:55.690

questions and a lot of times people just

0:23:53.050,0:23:57.610

want to be able to get their heads

0:23:55.690,0:23:59.260

around the whole concept before they

0:23:57.610,0:24:02.119

move forward and and i understand that

0:23:59.260,0:24:05.059

i’m happy to work with you

0:24:02.119,0:24:10.609

as far as my take that there are experts

0:24:05.059,0:24:12.379

and there are people that that fancy

0:24:10.609,0:24:15.259

themselves about experts it’s really

0:24:12.379,0:24:18.379

difficult to to sometimes discern

0:24:15.259,0:24:20.569

between the 2i and i think the the same

0:24:18.379,0:24:22.849

is true on the other side there’s people

0:24:20.569,0:24:24.289

that are earnestly looking to find those

0:24:22.849,0:24:26.959

experts as a lot of people that will

0:24:24.289,0:24:29.149

waste your time and so it there’s give

0:24:26.959,0:24:33.499

and take on both sides of the aisle and

0:24:29.149,0:24:35.719

so there’s it there’s a I think it’s

0:24:33.499,0:24:38.899

fair for both sides to filter out both

0:24:35.719,0:24:40.639

both people so on

0:24:38.899,0:24:43.519

I think just like this webinar this

0:24:40.639,0:24:46.069

webinar is a free content for people

0:24:43.519,0:24:48.919

looking for value to get it so they

0:24:46.069,0:24:54.289

could be better equipped to find experts

0:24:48.919,0:24:57.109

in to be better or more aware of how to

0:24:54.289,0:24:58.489

proceed in the industry so they can make

0:24:57.109,0:25:01.279

better decisions

0:24:58.489,0:25:05.179

hopefully there’s there’s content here

0:25:01.279,0:25:08.599

to make yourself aware to proceed

0:25:05.179,0:25:11.059

forward I would always be cautious of

0:25:08.599,0:25:14.149

riding big checks without quantifiable

0:25:11.059,0:25:15.979

results i would always go with your you

0:25:14.149,0:25:18.319

know your intuition guide and and

0:25:15.979,0:25:19.909

proceed forward and again all the the

0:25:18.319,0:25:22.279

old-time test of references and

0:25:19.909,0:25:24.499

referrals and you know that is is there

0:25:22.279,0:25:25.759

a trail success behind someone our trail

0:25:24.499,0:25:27.949

of dead bodies

0:25:25.759,0:25:32.629

that’s usually it you know the good

0:25:27.949,0:25:34.159

standard are typically go by but i would

0:25:32.629,0:25:37.399

i would definitely agree that there’s a

0:25:34.159,0:25:41.119

lot of great experts and successful

0:25:37.399,0:25:45.499

people this industry but I wouldn’t just

0:25:41.119,0:25:48.259

take someone’s word board would you

0:25:45.499,0:25:56.380

consider crowdfunding to sell a NASA as

0:25:48.259,0:26:02.380

creating

0:25:56.380,0:26:06.010

so there’s a lot of question of the cost

0:26:02.380,0:26:08.740

of the paperwork the crew of creating

0:26:06.010,0:26:12.610

the paperwork for a security

0:26:08.740,0:26:14.410

how can i how can a small business even

0:26:12.610,0:26:16.390

think about crowdfunding the

0:26:14.410,0:26:22.630

documentation required is so expensive

0:26:16.390,0:26:26.350

now I think we need to talk about it

0:26:22.630,0:26:28.120

just because well it’s a perception

0:26:26.350,0:26:30.130

thing right and so let’s just talk about

0:26:28.120,0:26:33.610

the perception for a moment

0:26:30.130,0:26:40.210

well because i think it’s whether it’s

0:26:33.610,0:26:41.440

yeah look and I guess that’s there

0:26:40.210,0:26:43.990

probably is a perception that it’s

0:26:41.440,0:26:47.740

expensive in expensive as I guess

0:26:43.990,0:26:49.420

relative right it’s it’s going to be

0:26:47.740,0:26:50.860

relative to the size of your business

0:26:49.420,0:26:54.910

it’s going to be relative to the amount

0:26:50.860,0:26:58.270

that you’re raising but that expense can

0:26:54.910,0:27:03.010

also be relative to the market you’re in

0:26:58.270,0:27:06.280

if you’re if you’re in New York or San

0:27:03.010,0:27:08.500

Francisco then wait one of those law

0:27:06.280,0:27:11.890

firms is going to charge you is going to

0:27:08.500,0:27:16.930

be significantly different than what

0:27:11.890,0:27:20.500

might get you know from an attorney and

0:27:16.930,0:27:24.730

in denver colorado or salt lake ER or

0:27:20.500,0:27:26.620

one of the smaller markets and that

0:27:24.730,0:27:28.960

being said and again this is completely

0:27:26.620,0:27:32.830

self-serving but that you’re not going

0:27:28.960,0:27:34.510

to i don’t feel i feel that they’re

0:27:32.830,0:27:37.510

experts going back to our last thing

0:27:34.510,0:27:40.390

that that are that are necessarily

0:27:37.510,0:27:42.550

located in the large law firms

0:27:40.390,0:27:45.970

throughout the country and I think that

0:27:42.550,0:27:51.010

you see you can get benefit from that

0:27:45.970,0:27:54.400

but that being said it’s going to vary i

0:27:51.010,0:27:57.490

don’t think it is necessarily Datak that

0:27:54.400,0:27:59.140

expensive if you’re going to raise you

0:27:57.490,0:28:01.000

know try to raise fifty thousand dollars

0:27:59.140,0:28:04.690

than yeah that might be you know

0:28:01.000,0:28:09.270

spending you know on a brown 506 C

0:28:04.690,0:28:11.340

offering spending $5,000 might you know

0:28:09.270,0:28:14.850

ten percent of the race but if you’re

0:28:11.340,0:28:17.700

trying to raise $500,000 and you’re

0:28:14.850,0:28:22.770

spending you know $10,000 suddenly

0:28:17.700,0:28:26.610

that’s that’s not that’s not a lot so so

0:28:22.770,0:28:29.070

I have another question that’s gonna go

0:28:26.610,0:28:31.530

on top of this one and i think it is

0:28:29.070,0:28:32.940

kind of I think it’s appropriate that

0:28:31.530,0:28:35.400

they go together

0:28:32.940,0:28:40.110

why is the job backed off to such a slow

0:28:35.400,0:28:43.230

start and a and I think they fit

0:28:40.110,0:28:45.090

together and on all answer first or all

0:28:43.230,0:28:46.920

start the conversation first

0:28:45.090,0:28:49.290

I think they fit together in the fact

0:28:46.920,0:28:51.840

that it’s a capitalist society so we

0:28:49.290,0:28:53.550

talk about the cost of a whether you

0:28:51.840,0:28:55.410

call it legal work already

0:28:53.550,0:28:59.910

whether it’s a cost of an accountant

0:28:55.410,0:29:03.180

doing a auto report or even the cost of

0:28:59.910,0:29:05.700

the portal or anything else because its

0:29:03.180,0:29:07.950

capital society there are hard costs of

0:29:05.700,0:29:09.840

things but there’s also competition that

0:29:07.950,0:29:15.630

drive costs down and innovation other

0:29:09.840,0:29:18.510

things and so if being a pay freeze

0:29:15.630,0:29:20.670

freaking some free capital society and

0:29:18.510,0:29:23.400

innovation that will drive costs down

0:29:20.670,0:29:28.590

this low demand that’s going to keep

0:29:23.400,0:29:34.770

costs hi it’s theirs if it’s I think the

0:29:28.590,0:29:37.110

delay in the the demand is as kept cost

0:29:34.770,0:29:43.380

a little high i think that has a lot to

0:29:37.110,0:29:45.660

do with the political delay this past

0:29:43.380,0:29:48.270

year that I think the election year has

0:29:45.660,0:29:50.490

got has given the demand a little bit of

0:29:48.270,0:29:53.010

a curveball that I have I have I

0:29:50.490,0:29:54.420

witnessed I’ve had feedback from those

0:29:53.010,0:29:56.100

last several months i think a lot of

0:29:54.420,0:29:58.620

people just been a little bit of a

0:29:56.100,0:30:00.840

political fund this last few months I

0:29:58.620,0:30:02.430

don’t know what you witness Marty last

0:30:00.840,0:30:04.740

several months as far as people just

0:30:02.430,0:30:06.420

really uncomfortable with what they were

0:30:04.740,0:30:08.850

going and I think they’re really been in

0:30:06.420,0:30:12.030

the very pause but i would say in

0:30:08.850,0:30:14.760

general if I was to go back the last

0:30:12.030,0:30:16.770

several years outside of the sec and

0:30:14.760,0:30:19.110

finra dragging their feet

0:30:16.770,0:30:20.490

I think the industry’s move very quickly

0:30:19.110,0:30:22.390

when you look at all the projections

0:30:20.490,0:30:25.900

crowdfunding

0:30:22.390,0:30:28.600

as was supposed to do that exceeded all

0:30:25.900,0:30:30.730

the projections as far as how much money

0:30:28.600,0:30:33.280

crowdfunding supposed to raise they have

0:30:30.730,0:30:36.610

exceeded every single mark so when we

0:30:33.280,0:30:39.220

talk about a slow start to crowdfunding

0:30:36.610,0:30:41.770

I’m saying what slow start and right

0:30:39.220,0:30:42.550

well what-what slope are we talking

0:30:41.770,0:30:44.560

about

0:30:42.550,0:30:47.860

and so when we you know so i think our

0:30:44.560,0:30:50.020

expectations are a little bit ahead of

0:30:47.860,0:30:52.270

ourselves when we talk about slow

0:30:50.020,0:30:55.810

because i don’t see slow

0:30:52.270,0:30:59.710

what I see is maybe we’re spoiled

0:30:55.810,0:31:03.790

because you know we want everything to

0:30:59.710,0:31:06.730

be lightning fast because you know we

0:31:03.790,0:31:09.460

see other industries very very developed

0:31:06.730,0:31:13.240

and mature but we want this brand-new

0:31:09.460,0:31:14.920

baby industry to be as mature as these

0:31:13.240,0:31:18.190

other industries that have already been

0:31:14.920,0:31:21.250

around for 20 30 50 years when r is

0:31:18.190,0:31:24.340

brand-new and it’s just not there yet

0:31:21.250,0:31:26.020

yeah i’m gonna agree i don’t think I so

0:31:24.340,0:31:31.120

you know one thing you might say was

0:31:26.020,0:31:34.450

slow that getting the regulations passed

0:31:31.120,0:31:39.460

you have been involved with this pre

0:31:34.450,0:31:41.950

Jobs Act was involved very closely

0:31:39.460,0:31:45.370

involved with the JOBS Act monitored

0:31:41.950,0:31:48.880

that participated in that process and

0:31:45.370,0:31:55.480

and from the time that the JOBS Act was

0:31:48.880,0:31:59.620

passed to the network was in you know

0:31:55.480,0:32:03.190

2012 to the time where we finally got

0:31:59.620,0:32:08.410

the regulations for under xef and that

0:32:03.190,0:32:12.640

that was there was obviously some laps

0:32:08.410,0:32:14.800

in that I mean you had several years

0:32:12.640,0:32:18.070

passed by so there is i guess people to

0:32:14.800,0:32:21.970

say that was slow but i think the that

0:32:18.070,0:32:27.160

being said it’s been successful and it

0:32:21.970,0:32:29.410

is growing on the fact that you know

0:32:27.160,0:32:31.540

that this was these are old numbers this

0:32:29.410,0:32:33.929

was the end of quarter 12 the first

0:32:31.540,0:32:37.679

quarter after the wreck CF

0:32:33.929,0:32:42.269

was past you had no 82 campaigns filed

0:32:37.679,0:32:44.399

you had close to 10 million dollars in

0:32:42.269,0:32:47.190

in commitments and this is for a brand

0:32:44.399,0:32:49.230

new legislation brand new industry to so

0:32:47.190,0:32:51.029

to see that within a certain that period

0:32:49.230,0:32:54.029

of time and i’m sure i haven’t seen

0:32:51.029,0:32:56.789

numbers for the second quarter but i am

0:32:54.029,0:32:58.919

sure that they would double that so I

0:32:56.789,0:33:00.659

think if it’s off to I think it’s off to

0:32:58.919,0:33:02.639

a good start and I think it will

0:33:00.659,0:33:04.230

continue to grow and in people become

0:33:02.639,0:33:06.450

more comfortable with it

0:33:04.230,0:33:08.460

one area where you’ve seen you know

0:33:06.450,0:33:12.690

anything but it being slow as in the

0:33:08.460,0:33:14.669

real estate field and companies like

0:33:12.690,0:33:18.419

fundrise in reality mobile reality

0:33:14.669,0:33:22.080

shares those companies have that that is

0:33:18.419,0:33:26.850

almost become the norm for syndicating

0:33:22.080,0:33:28.740

doing real estate syndications and it’s

0:33:26.850,0:33:30.869

also become the norm for a lot of real

0:33:28.740,0:33:32.190

estate finance that’s where people are

0:33:30.869,0:33:35.340

getting the funding that’s how they’re

0:33:32.190,0:33:37.860

doing it now so I think you’ve seen a

0:33:35.340,0:33:39.869

huge market exception era acceptance

0:33:37.860,0:33:45.690

there

0:33:39.869,0:33:49.200

yeah i-i-i agreed that we are quick to

0:33:45.690,0:33:51.059

see the remaining issues that we’re kind

0:33:49.200,0:33:52.590

of almost frustrated with why can’t they

0:33:51.059,0:33:55.320

just stay and fix this

0:33:52.590,0:34:00.119

why can’t this be easier but I think

0:33:55.320,0:34:05.070

we’re almost spoiled the fact that we

0:34:00.119,0:34:08.819

how soon we forget how far we’ve come in

0:34:05.070,0:34:10.589

such a short amount of time so let’s go

0:34:08.819,0:34:13.859

back to some oldies but some goodies we

0:34:10.589,0:34:16.260

still get people asking do we have to be

0:34:13.859,0:34:23.970

a broker-dealer to have a crowdfunding

0:34:16.260,0:34:26.369

portal how no answer is now

0:34:23.970,0:34:28.740

broker-dealers would say you need to use

0:34:26.369,0:34:29.490

a broker-dealer but technically no you

0:34:28.740,0:34:34.230

do not

0:34:29.490,0:34:37.079

so what did broker-dealers say that well

0:34:34.230,0:34:42.329

obviously their self-interest but it’s

0:34:37.079,0:34:45.659

it is safer to use so let me back up the

0:34:42.329,0:34:47.510

answer is is a qualified know if you are

0:34:45.659,0:34:51.770

doing a

0:34:47.510,0:34:57.020

506 C raise or to an accredited investor

0:34:51.770,0:34:59.000

raised on your you do not need to be a

0:34:57.020,0:35:01.190

broker-dealer to have that to operate a

0:34:59.000,0:35:06.530

platform if that platt is so long as

0:35:01.190,0:35:10.520

you’re not charging Commission’s sites

0:35:06.530,0:35:11.750

such as you know angels list uses you

0:35:10.520,0:35:13.970

know there are other real estate

0:35:11.750,0:35:16.820

platforms that simply charge of a

0:35:13.970,0:35:19.220

listing fee it’s not based upon the

0:35:16.820,0:35:21.140

success of the Rays it’s not tied to a

0:35:19.220,0:35:27.620

percentage of the races just a flat fee

0:35:21.140,0:35:31.400

and or transaction fee those companies

0:35:27.620,0:35:34.490

are not broker-dealers and one isn’t

0:35:31.400,0:35:37.550

required the other option is if you’re a

0:35:34.490,0:35:43.220

thinner approved sec finger approved

0:35:37.550,0:35:45.860

funding portal to do regular CF e that’s

0:35:43.220,0:35:48.380

authorized to write CF offerings you do

0:35:45.860,0:35:51.050

not need to be a broker-dealer and you

0:35:48.380,0:35:53.030

can charge Commission’s but again you’re

0:35:51.050,0:35:57.110

limited to racism up to a million

0:35:53.030,0:36:00.350

dollars under Regulation CF why it makes

0:35:57.110,0:36:02.990

sense to use a broker dealer is you are

0:36:00.350,0:36:05.600

offering securities lot of people do use

0:36:02.990,0:36:08.270

a broker-dealer because that allows them

0:36:05.600,0:36:10.820

to take commissions for to work with the

0:36:08.270,0:36:15.260

broker-dealer to on compensation

0:36:10.820,0:36:15.770

structures that might work better for

0:36:15.260,0:36:17.750

them

0:36:15.770,0:36:20.960

the other thing is again you’re selling

0:36:17.750,0:36:22.520

securities and the having a

0:36:20.960,0:36:24.530

broker-dealer does provide a layer of

0:36:22.520,0:36:25.970

protection because your securities are

0:36:24.530,0:36:31.700

being sold through a licensed broker

0:36:25.970,0:36:35.000

dealer so it’s a qualified no answer so

0:36:31.700,0:36:37.070

whatever participants they heard you

0:36:35.000,0:36:40.580

mention Republic restaurant restoratives

0:36:37.070,0:36:42.530

and he said you had mentioned helping

0:36:40.580,0:36:45.140

the Republic restoratives with their

0:36:42.530,0:36:47.480

documents for their raise it looks like

0:36:45.140,0:36:51.080

the minimum investment goal is 50 k

0:36:47.480,0:36:52.940

their maximum 300k my understanding is

0:36:51.080,0:36:54.740

that the minimum has to be no less than

0:36:52.940,0:36:56.120

half of the max goal

0:36:54.740,0:37:03.200

how do you get around that

0:36:56.120,0:37:05.540

gasps that’s misinformation yeah okay so

0:37:03.200,0:37:07.970

the the misunderstanding what the actual

0:37:05.540,0:37:10.130

headlines yeah and you’re seeing this a

0:37:07.970,0:37:12.860

lot with a lot of these i know that for

0:37:10.130,0:37:17.690

example I was speaking with that someone

0:37:12.860,0:37:20.990

start engine last week about this and

0:37:17.690,0:37:22.940

did they’re really going with and it’s

0:37:20.990,0:37:25.970

Benson it’s been based on feedback from

0:37:22.940,0:37:29.000

the SEC that initially people coming out

0:37:25.970,0:37:31.040

saying we’re going to raise and I think

0:37:29.000,0:37:36.440

become the comparison there is like

0:37:31.040,0:37:39.200

under a full rewards-based campaign say

0:37:36.440,0:37:42.590

we’re gonna raise $250,000 if you don’t

0:37:39.200,0:37:45.020

raise that 250 then the campaign fails

0:37:42.590,0:37:46.940

you’re amazing yeah and so a lot of that

0:37:45.020,0:37:49.910

all or nothing model is kind of people

0:37:46.940,0:37:52.010

following that they the there’s been

0:37:49.910,0:37:55.550

feedback that you can have a much lower

0:37:52.010,0:37:58.520

minimum and so people are using your I

0:37:55.550,0:38:01.670

think you’ll start to see lower minimums

0:37:58.520,0:38:04.580

which allows the company to at least say

0:38:01.670,0:38:06.080

well hey we only sold Willie raise fifty

0:38:04.580,0:38:08.900

thousand dollars but we can at least

0:38:06.080,0:38:13.790

take that versus trying to go for

0:38:08.900,0:38:15.800

receive the whole 300,000 and you know

0:38:13.790,0:38:17.810

hope in you you’re seeing a lot of

0:38:15.800,0:38:21.410

people to blow by those minimums to

0:38:17.810,0:38:25.700

those in and try to go up to that full

0:38:21.410,0:38:27.470

targeted amount so going back to the

0:38:25.700,0:38:29.660

broker-dealer question is there a

0:38:27.470,0:38:31.970

difference between taking a commission

0:38:29.660,0:38:35.510

and charging a flat fee

0:38:31.970,0:38:39.230

yes so what would be the difference so

0:38:35.510,0:38:40.880

what if I is there a difference in

0:38:39.230,0:38:45.170

charge a flat fee at the beginning or

0:38:40.880,0:38:50.210

the end yet so the flat fee again eat

0:38:45.170,0:38:53.990

the key to that is you know Commission

0:38:50.210,0:38:56.450

is typically paid upon its time to the

0:38:53.990,0:39:00.590

success of of whatever the sale i mean

0:38:56.450,0:39:03.110

it’s it’s it’s the equivalent of

0:39:00.590,0:39:05.300

charging paying somebody salary versus

0:39:03.110,0:39:07.970

paying your car salesmen on commission

0:39:05.300,0:39:09.440

if you pay the car salesman thirty

0:39:07.970,0:39:11.750

thousand dollars a year and he

0:39:09.440,0:39:14.690

doesn’t make anything on the cell of a

0:39:11.750,0:39:17.750

car that’s that’s essentially your flat

0:39:14.690,0:39:19.369

fee right but if your salesman is being

0:39:17.750,0:39:21.829

compensated on the cell car and he gets

0:39:19.369,0:39:23.210

a percentage of whatever sells that’s a

0:39:21.829,0:39:26.510

commission if you’re getting a

0:39:23.210,0:39:28.369

commission which is the only make money

0:39:26.510,0:39:32.839

when the car sales you only get money

0:39:28.369,0:39:35.390

when that when that offering is sold

0:39:32.839,0:39:49.040

then you need to be a broker-dealer

0:39:35.390,0:39:50.720

gotcha but are federally registered CF

0:39:49.040,0:39:53.390

portals limited the tile three

0:39:50.720,0:40:02.660

where could they also do anything Kyle

0:39:53.390,0:40:05.750

two or four they are limited to and

0:40:02.660,0:40:09.770

you’ll see actually you’ll see there are

0:40:05.750,0:40:12.530

groups out there doing all of them right

0:40:09.770,0:40:15.770

yes so their internal three and titled

0:40:12.530,0:40:20.270

to and title for the way they do that is

0:40:15.770,0:40:24.140

is kind of tricky but what you’ll have

0:40:20.270,0:40:27.380

is a model that they’re going with is

0:40:24.140,0:40:30.440

the platforms are owned by one company

0:40:27.380,0:40:34.069

the reg CF offerings are being conducted

0:40:30.440,0:40:40.130

by the licensed the federally licensed

0:40:34.069,0:40:42.109

intermediary direct CF our the reggae

0:40:40.130,0:40:44.240

deals are being done by completely

0:40:42.109,0:40:48.470

separate entity they’re all being done

0:40:44.240,0:40:50.480

on the same platform which i think is

0:40:48.470,0:40:53.180

great i actually you know give bad

0:40:50.480,0:40:56.569

advice when this was all coming out on

0:40:53.180,0:40:59.030

you can you can’t do that and then

0:40:56.569,0:41:04.160

somebody did and and now that’s the

0:40:59.030,0:41:06.710

model so which is great so it is the

0:41:04.160,0:41:08.869

thing that’s Fitz fun about this for me

0:41:06.710,0:41:10.250

and fun to get frustrating because I get

0:41:08.869,0:41:13.069

called on stuff like all the time will

0:41:10.250,0:41:19.790

you said this and it’s an evolving area

0:41:13.069,0:41:21.740

and the evolution is happening you know

0:41:19.790,0:41:22.760

daily there’s new things that are

0:41:21.740,0:41:25.250

happening every day

0:41:22.760,0:41:29.180

in and people are testing what can be

0:41:25.250,0:41:31.160

done because were were bumping up

0:41:29.180,0:41:33.710

against so many boundaries and entering

0:41:31.160,0:41:38.990

so many new frontiers that you know a

0:41:33.710,0:41:41.600

lot of times the rules are made on the

0:41:38.990,0:41:43.460

fly and in telephone conversations that

0:41:41.600,0:41:45.440

myself for my colleagues are having with

0:41:43.460,0:41:47.720

the SEC filings and hey we want to try

0:41:45.440,0:41:50.960

we want to do this is that ok

0:41:47.720,0:41:56.570

and I’ve actually been surprised at how

0:41:50.960,0:41:59.150

willing the SEC has been to work with

0:41:56.570,0:42:01.340

people i think that goes back to the you

0:41:59.150,0:42:03.950

know discussion about the Commissioner

0:42:01.340,0:42:08.660

stepping down and I’ve seen I’ve seen

0:42:03.950,0:42:11.570

more creativity and and flexibility at

0:42:08.660,0:42:13.130

the SEC in the past year that I’ve seen

0:42:11.570,0:42:16.070

in my whole career

0:42:13.130,0:42:20.000

yeah I haven’t had a lot of complaints

0:42:16.070,0:42:21.590

about the sec in my short time with the

0:42:20.000,0:42:24.980

last few years I thought they’ve been a

0:42:21.590,0:42:28.670

reasonable agency gonna have a bit i’ve

0:42:24.980,0:42:31.430

had a very limited exposure tone the

0:42:28.670,0:42:36.110

there’s a German asking if a company

0:42:31.430,0:42:37.640

issuing securities for different SPVs is

0:42:36.110,0:42:40.940

a company limited to a million dollars

0:42:37.640,0:42:44.600

press PP or all SPVs combined it’s a

0:42:40.940,0:42:48.620

little tricky question i think ii yeah

0:42:44.600,0:42:50.390

so yeah so if you’re trying to say okay

0:42:48.620,0:42:52.040

I’m a parent company and I know that

0:42:50.390,0:42:53.810

limited to a million dollars and Sun

0:42:52.040,0:42:55.100

formed this subsidiary enumerates

0:42:53.810,0:42:56.810

million there and another subsidiary

0:42:55.100,0:43:00.980

they’re going to integrate those

0:42:56.810,0:43:03.980

offerings so it’s limited to million

0:43:00.980,0:43:09.980

dollars across all affiliated entities

0:43:03.980,0:43:12.950

now if you are you know it’s sort of a

0:43:09.980,0:43:15.200

large holding company in these are truly

0:43:12.950,0:43:17.210

unrelated businesses with separate books

0:43:15.200,0:43:21.380

records separate management separate

0:43:17.210,0:43:22.910

business models several markets then you

0:43:21.380,0:43:25.100

know the argument we made the truly are

0:43:22.910,0:43:27.440

there different companies but if you’re

0:43:25.100,0:43:32.810

using the SB model to get around that

0:43:27.440,0:43:33.920

million-dollar limitation then it’s not

0:43:32.810,0:43:37.490

gonna fly

0:43:33.920,0:43:46.490

great

0:43:37.490,0:43:49.430

um does a registered investment advisor

0:43:46.490,0:43:55.460

qualify as an accredited investor for

0:43:49.430,0:43:59.000

purposes of crowdfunding was that again

0:43:55.460,0:44:02.450

does a registered investment advisor

0:43:59.000,0:44:09.950

qualify as a credit investor for the

0:44:02.450,0:44:12.710

purposes of crown flood i would assume

0:44:09.950,0:44:16.280

so because they would they would mean

0:44:12.710,0:44:18.799

that the registered investment advisor

0:44:16.280,0:44:21.380

is hired by an investor to go on

0:44:18.799,0:44:24.109

basically place their money or manage

0:44:21.380,0:44:27.440

their money so they’re going to look

0:44:24.109,0:44:29.540

through to the they’re gonna look

0:44:27.440,0:44:33.140

through to the ultimate investor right

0:44:29.540,0:44:36.589

just I think just by virtue of being a

0:44:33.140,0:44:38.270

registered investment advisor if you’re

0:44:36.589,0:44:39.829

acting on behalf of another investor

0:44:38.270,0:44:47.329

that other investors going to have to be

0:44:39.829,0:44:55.460

meet the qualifications

0:44:47.329,0:44:58.940

alright well that does it for this

0:44:55.460,0:45:00.410

week’s for this month’s legal our with

0:44:58.940,0:45:03.530

Marty Tate would like to thank everyone

0:45:00.410,0:45:11.260

for their participation and we hope you

0:45:03.530,0:45:11.260

had a great day thank you thanks

October

0:00:00.000,0:00:07.200

ok it’s time to start

0:00:07.200,0:00:09.570

welcome everyone to the legal our with

0:00:09.570,0:00:11.490

Marty tape i’m your host break from

0:00:11.490,0:00:13.710

crowd engine please feel free to submit

0:00:13.710,0:00:15.480

your question your legal questions and

0:00:15.480,0:00:17.279

your chat box during the webinar will

0:00:17.279,0:00:20.279

try to get to as many as possible

0:00:20.279,0:00:22.859

first we want i want to talk to Marty

0:00:22.859,0:00:26.279

about legal questions i get asked all

0:00:26.279,0:00:28.740

the time and pretty much have gotten

0:00:28.740,0:00:33.180

consistently last several years and most

0:00:33.180,0:00:36.090

popular ones they still get when it kind

0:00:36.090,0:00:38.190

of surprised me as I have to be a

0:00:38.190,0:00:40.739

broker-dealer to participate in

0:00:40.739,0:00:44.640

crowdfunding well yeah

0:00:44.640,0:00:46.469

first of all thanks for having me it’s a

0:00:46.469,0:00:49.469

good to be here i will try to forget

0:00:49.469,0:00:51.690

everything that I learned last night in

0:00:51.690,0:00:54.300

the presidential debate but the task

0:00:54.300,0:00:57.390

that hopefully brand won’t in the middle

0:00:57.390,0:00:59.760

Maya and again saying print will start

0:00:59.760,0:01:02.100

in rejecting you know the word wrong or

0:01:02.100,0:01:06.299

or anything but we should also say that

0:01:06.299,0:01:09.030

this is for educational purposes and

0:01:09.030,0:01:11.310

then oh well well you are phenomenal

0:01:11.310,0:01:13.740

securities attorney you’re not given any

0:01:13.740,0:01:15.630

official legal applies in this

0:01:15.630,0:01:18.780

particular webinar podcast this is you

0:01:18.780,0:01:20.880

know not advice advice i guess you could

0:01:20.880,0:01:24.420

say so go back to your question about do

0:01:24.420,0:01:26.939

you have to be a broker-dealer the

0:01:26.939,0:01:30.090

answer is no there are broker-dealer

0:01:30.090,0:01:33.540

clients of mine that would get upset

0:01:33.540,0:01:36.119

when I say that when do you have to use

0:01:36.119,0:01:38.579

a broker-dealer the answer is typically

0:01:38.579,0:01:43.409

it’s really depends right but they’re

0:01:43.409,0:01:47.250

there are situations where certain types

0:01:47.250,0:01:49.259

of offering certain types of activities

0:01:49.259,0:01:51.720

do not require that tbo broker-dealer

0:01:51.720,0:01:54.000

really it depends on you know what

0:01:54.000,0:01:55.649

you’re dealing how you’re doing and how

0:01:55.649,0:01:57.840

you’re being paid for it

0:01:57.840,0:02:01.320

how big is that that’s that’s extremely

0:02:01.320,0:02:03.270

big so let’s go a little bit deeper so

0:02:03.270,0:02:05.610

that we could actually get some more

0:02:05.610,0:02:08.220

value so what is a circumstance where

0:02:08.220,0:02:10.100

you must be broken either

0:02:10.100,0:02:12.560

so the circumstance where you must be a

0:02:12.560,0:02:15.680

broker-dealer is if you plan to or work

0:02:15.680,0:02:22.100

or somehow we hope yet eh eh you know

0:02:22.100,0:02:24.770

registration of a broker-dealer is if

0:02:24.770,0:02:27.320

you plan on taking commissions you’re

0:02:27.320,0:02:34.850

going to be or you are or you’re selling

0:02:34.850,0:02:39.380

to securities under Regulation cf4 or a

0:02:39.380,0:02:40.790

title three

0:02:40.790,0:02:43.580

now that’s not now i give the caveat

0:02:43.580,0:02:47.570

caveat did in order to sell securities

0:02:47.570,0:02:51.590

under title title 3 or regulation CF you

0:02:51.590,0:02:54.770

have to use a either a broker dealer or

0:02:54.770,0:02:58.130

a funding portal which has been approved

0:02:58.130,0:03:03.620

and abetted by the sec and finra so

0:03:03.620,0:03:07.460

those those are the situations but again

0:03:07.460,0:03:09.770

it depends on what you’re doing you know

0:03:09.770,0:03:11.060

how you’re doing and how you’re getting

0:03:11.060,0:03:14.120

paid so if I plan to get commissioned

0:03:14.120,0:03:16.730

from the total raised i must be a

0:03:16.730,0:03:20.240

broker-dealer in order to legally do

0:03:20.240,0:03:24.590

those are correct yes enough so let’s go

0:03:24.590,0:03:26.060

back a little bit so if you’re selling

0:03:26.060,0:03:28.550

secured generally just the rule is if

0:03:28.550,0:03:31.340

you’re selling securities for somebody

0:03:31.340,0:03:35.210

else and you’re receiving a commission

0:03:35.210,0:03:37.400

you’re being paid for it then you need

0:03:37.400,0:03:41.150

to be licensed as a broker-dealer the 1a

0:03:41.150,0:03:44.780

the one exception to that is under a

0:03:44.780,0:03:52.580

regulation CF the SEC made an exception

0:03:52.580,0:03:55.910

they created basically a almost like a

0:03:55.910,0:03:57.680

broker-dealer light they created this

0:03:57.680,0:04:06.200

this new and stuff yeah that that is a

0:04:06.200,0:04:09.320

what they call it you know a funding

0:04:09.320,0:04:13.640

portal or intermediary and a funding

0:04:13.640,0:04:15.530

portal does not have to be registered as

0:04:15.530,0:04:17.450

a broker-dealer can be a broker-dealer

0:04:17.450,0:04:20.090

but what they can do is they can go

0:04:20.090,0:04:21.590

through the process go through the

0:04:21.590,0:04:23.520

process with the sec and finra

0:04:23.520,0:04:26.039

and become licensed as a funding portal

0:04:26.039,0:04:28.860

and as a funding portal this license

0:04:28.860,0:04:31.410

with FINRA they can receive commissions

0:04:31.410,0:04:36.690

on the sale of securities offered under

0:04:36.690,0:04:40.440

46 that’s that the no regulation

0:04:40.440,0:04:42.300

crowdfunding exemption they cannot

0:04:42.300,0:04:45.629

charge commissions on any other types of

0:04:45.629,0:04:49.319

securities offerings Joshua so what

0:04:49.319,0:04:51.569

about registered investment wise is how

0:04:51.569,0:04:53.729

do they come into the picture because we

0:04:53.729,0:04:55.289

know there’s a lot of registered

0:04:55.289,0:04:57.479

investment advisors out there even a

0:04:57.479,0:04:58.830

several that are entering the

0:04:58.830,0:05:02.759

crowdfunding space do they needed

0:05:02.759,0:05:04.800

upgrade their license to become a

0:05:04.800,0:05:06.840

broker-dealer are they safe

0:05:06.840,0:05:08.490

what’s your opinion so the difference

0:05:08.490,0:05:10.710

between a broker-dealer and investment

0:05:10.710,0:05:13.110

advisor really comes down to you know

0:05:13.110,0:05:15.000

what they do it and who is paying them

0:05:15.000,0:05:17.849

investment advisors typically paid by

0:05:17.849,0:05:24.150

the by the investor investor a

0:05:24.150,0:05:26.940

investment advisor I’m someone is hired

0:05:26.940,0:05:29.460

by investors say hey go out and invest

0:05:29.460,0:05:30.300

my money

0:05:30.300,0:05:32.039

help me manage this money will be put in

0:05:32.039,0:05:34.050

places where it you know will be

0:05:34.050,0:05:37.919

beneficial and in order to do that in

0:05:37.919,0:05:39.659

order to take a commission from the

0:05:39.659,0:05:42.630

investor they need to be licenses

0:05:42.630,0:05:44.849

investment advisor that’s different from

0:05:44.849,0:05:46.830

a broker-dealer broker-dealers typically

0:05:46.830,0:05:49.139

paid by the issuer by the person who’s

0:05:49.139,0:05:52.680

raising the money and so if they are a

0:05:52.680,0:05:55.560

wants to get paid by the issuer then

0:05:55.560,0:05:57.330

yeah they have to be licensed just like

0:05:57.330,0:06:01.110

a like a broker-dealer gotcha so we have

0:06:01.110,0:06:04.440

broker-dealers we have registered

0:06:04.440,0:06:07.020

investment advisors and then we have

0:06:07.020,0:06:10.560

direct issuers so i can get it as a

0:06:10.560,0:06:12.539

direct issuer i could raise money for my

0:06:12.539,0:06:15.120

own entity without needing to hire

0:06:15.120,0:06:17.699

brokered either or using registered

0:06:17.699,0:06:20.099

investment advisor correct correct so if

0:06:20.099,0:06:22.590

you’re and this is what companies do

0:06:22.590,0:06:26.250

every day all the time is you know this

0:06:26.250,0:06:30.960

long predates a crowdfunding you know if

0:06:30.960,0:06:33.180

I have a company have a start-up i have

0:06:33.180,0:06:37.110

a I tech company whatever it is

0:06:37.110,0:06:38.370

and I want to go out and raise money

0:06:38.370,0:06:40.470

real estate fund yeah yeah real estate

0:06:40.470,0:06:41.910

fun i want to raise money for a real

0:06:41.910,0:06:46.140

estate fund then I don’t need to get

0:06:46.140,0:06:47.880

correct i don’t need to be licensed as a

0:06:47.880,0:06:50.130

broker-dealer to go out and raise those

0:06:50.130,0:06:53.190

that money now if i’m being paid a

0:06:53.190,0:06:55.620

commission I’m if I’m somebody that

0:06:55.620,0:06:57.060

works for that real estate fund i’m

0:06:57.060,0:06:58.440

being paid a commission then yeah I

0:06:58.440,0:07:02.070

would have to be licensed and a lot of

0:07:02.070,0:07:06.540

states actually have an exemption for

0:07:06.540,0:07:09.210

those types of people that are higher

0:07:09.210,0:07:11.280

just by the district called issuer

0:07:11.280,0:07:13.620

agents initial agents can go and be

0:07:13.620,0:07:15.330

licensed with the state and they can

0:07:15.330,0:07:19.200

raise you know they can assist in raises

0:07:19.200,0:07:21.780

for a single issuer and their

0:07:21.780,0:07:24.120

limitations state limitations on that

0:07:24.120,0:07:27.300

but but dancer you have to go back to

0:07:27.300,0:07:31.560

your question yet a direct for example a

0:07:31.560,0:07:33.060

real estate finance raising money they

0:07:33.060,0:07:35.160

don’t have to be licensed and one thing

0:07:35.160,0:07:39.390

did to you know take a a detour off the

0:07:39.390,0:07:41.670

side here a lot of those real estate

0:07:41.670,0:07:44.610

funds do have to be careful because they

0:07:44.610,0:07:47.940

are you know one exception for fun is

0:07:47.940,0:07:51.180

because it’s a fund they are technically

0:07:51.180,0:07:52.560

managing other people’s money and

0:07:52.560,0:07:56.490

getting paid for it so real estate funds

0:07:56.490,0:08:01.140

like other hedge funds generally require

0:08:01.140,0:08:04.620

that the manager be licenses as an

0:08:04.620,0:08:06.990

investment adviser that’s something we

0:08:06.990,0:08:11.190

have dealt with you on number times so

0:08:11.190,0:08:14.910

do i need so does someone need to be a

0:08:14.910,0:08:16.950

broker-dealer if they’re offering stock

0:08:16.950,0:08:22.350

options now any stock options are the

0:08:22.350,0:08:24.240

same as any other security

0:08:24.240,0:08:27.240

it’s just it’s right to a buy stock in

0:08:27.240,0:08:30.090

the future so absolutely unless it’s in

0:08:30.090,0:08:32.220

a film director sure i’m offering stock

0:08:32.220,0:08:33.900

options now it’s starting to get the

0:08:33.900,0:08:35.580

grade so another now we’re adding

0:08:35.580,0:08:38.280

complications if you’re okay so I’m

0:08:38.280,0:08:41.640

sorry let me back up on that branch

0:08:41.640,0:08:43.229

sorry trying to throw curveballs and

0:08:43.229,0:08:46.980

down so direct issue our company

0:08:46.980,0:08:50.520

obviously I say

0:08:50.520,0:08:52.380

obviously because we it’s done all the

0:08:52.380,0:08:55.050

time companies can offer securities to

0:08:55.050,0:08:56.460

their own stock options to their

0:08:56.460,0:08:58.650

employees that’s hundreds that Center is

0:08:58.650,0:09:03.180

completely separate exemption and that

0:09:03.180,0:09:05.400

allows companies to do that I guess

0:09:05.400,0:09:08.010

where i was going as if a company is

0:09:08.010,0:09:10.410

trying to go out where I thought you’re

0:09:10.410,0:09:12.180

going is saying the companies trying to

0:09:12.180,0:09:13.950

go out and raise money through some sort

0:09:13.950,0:09:16.020

of selling style additives or who

0:09:16.020,0:09:18.750

investors investors yes and they would

0:09:18.750,0:09:21.570

have to you and somebody’s getting paid

0:09:21.570,0:09:24.090

to facilitate those cells and yeah that

0:09:24.090,0:09:28.080

person have to be broker-dealer so

0:09:28.080,0:09:33.000

judges and so that the last one is a

0:09:33.000,0:09:36.180

market portal right as a marketing

0:09:36.180,0:09:39.000

portal are you required outside of the

0:09:39.000,0:09:40.680

title three scenarios are you required

0:09:40.680,0:09:43.320

to have any licensing to in order to

0:09:43.320,0:09:45.480

have a marketing crowdfunding portal

0:09:45.480,0:09:48.780

where you have one project or a thousand

0:09:48.780,0:09:51.270

project for deals on portal I guess what

0:09:51.270,0:09:52.530

do you mean that marketing portal

0:09:52.530,0:09:55.530

marketing portal would be a marketplace

0:09:55.530,0:09:58.260

poor people are posting their deal on

0:09:58.260,0:10:01.470

your portal right so it’s just like so

0:10:01.470,0:10:04.080

the issuers are coming to you saying we

0:10:04.080,0:10:06.330

want you to market our deal you post

0:10:06.330,0:10:08.670

their deal on the portal there the issue

0:10:08.670,0:10:10.590

that the escrows in their name the money

0:10:10.590,0:10:12.750

goes directly to them and they’re paying

0:10:12.750,0:10:15.450

your marketing fee for that service like

0:10:15.450,0:10:17.520

a bulletin board similar to alexa

0:10:17.520,0:10:21.750

bulletin board so in there are several

0:10:21.750,0:10:23.310

groups there they’re obviously doing

0:10:23.310,0:10:24.660

that and some of them are really

0:10:24.660,0:10:27.930

well-known and if you had a lot of

0:10:27.930,0:10:31.050

traction and done very well in those

0:10:31.050,0:10:34.320

groups the again it comes down to what

0:10:34.320,0:10:36.270

are they doing and how are they getting

0:10:36.270,0:10:40.200

paid marketing portals typically are not

0:10:40.200,0:10:41.880

getting paid commissions they might be

0:10:41.880,0:10:46.500

paid a listing fee flat listing fee they

0:10:46.500,0:10:50.910

might be paid on a per click model or a

0:10:50.910,0:10:55.770

per person that signs up but it’s not

0:10:55.770,0:10:58.980

based upon its it’s not a commission

0:10:58.980,0:11:00.660

it’s not based upon what is already

0:11:00.660,0:11:02.680

traits for success of the camp

0:11:02.680,0:11:05.320

right so far there’s no what there’s not

0:11:05.320,0:11:09.610

a in order to avoid registration

0:11:09.610,0:11:13.630

problems in those situations it’s best

0:11:13.630,0:11:16.120

not to again to be tied to the success

0:11:16.120,0:11:20.680

of the thick the race or email is being

0:11:20.680,0:11:23.410

raised within the broker-dealer in our a

0:11:23.410,0:11:26.560

world is there any distinction from a

0:11:26.560,0:11:28.330

licensing perspective between real

0:11:28.330,0:11:30.670

estate and other industry verticals that

0:11:30.670,0:11:33.370

people entering the space should be

0:11:33.370,0:11:34.360

aware of

0:11:34.360,0:11:38.260

huh no not really I mean

0:11:38.260,0:11:41.470

security security you’re selling if

0:11:41.470,0:11:43.209

you’re selling interest in a real estate

0:11:43.209,0:11:47.080

fund or a single real estate project

0:11:47.080,0:11:49.300

you’re still selling securities and

0:11:49.300,0:11:50.350

that’s not going to be any different

0:11:50.350,0:11:52.420

than if you’re selling securities in a

0:11:52.420,0:11:59.800

operating company question um kinda

0:11:59.800,0:12:02.320

crowdfunding portal take advantage of

0:12:02.320,0:12:05.740

the issue exemption and for example not

0:12:05.740,0:12:09.640

set up an SPV for an investment deal for

0:12:09.640,0:12:11.980

example company a comes on to

0:12:11.980,0:12:15.100

crowdfunding portal and the the portal

0:12:15.100,0:12:20.080

facilitates a direct investments in this

0:12:20.080,0:12:31.870

company a so there’s a good i guess the

0:12:31.870,0:12:40.089

question really becomes um does it does

0:12:40.089,0:12:42.940

the SPV influence where they may be a

0:12:42.940,0:12:47.500

broker-dealer not and in the exchange of

0:12:47.500,0:12:48.970

the night and I think it’s a matter of

0:12:48.970,0:12:51.250

this is a question that you have to hire

0:12:51.250,0:12:53.079

a lawyer and ask and have have the

0:12:53.079,0:12:55.029

professional opinion given because

0:12:55.029,0:12:57.190

there’s a lot of curveballs and what if

0:12:57.190,0:12:58.420

scenarios in the end

0:12:58.420,0:13:01.060

that question and as I kept on school

0:13:01.060,0:13:02.709

into the question just got deeper deeper

0:13:02.709,0:13:05.110

so I apologize to everyone listen those

0:13:05.110,0:13:07.839

a what I thought was a two-line question

0:13:07.839,0:13:12.100

became a 10-question so let me I’m I’m

0:13:12.100,0:13:14.170

gonna attempt to please try to parse

0:13:14.170,0:13:22.899

that out and this so the day it goes

0:13:22.899,0:13:24.010

back to what we were talking about

0:13:24.010,0:13:28.120

before if it’s a company is going to say

0:13:28.120,0:13:32.320

for example an SPV is trying to race is

0:13:32.320,0:13:33.730

trying to raise money

0:13:33.730,0:13:36.550

% one of these exemptions will back up a

0:13:36.550,0:13:41.290

little bit the JOBS Act which set this

0:13:41.290,0:13:45.430

whole crowdfunding ball rolling I guess

0:13:45.430,0:13:46.959

as far as equity crowdfunding debt

0:13:46.959,0:13:51.699

crowdfunding it has you know has

0:13:51.699,0:13:53.920

multiple parts but when people think of

0:13:53.920,0:13:55.959

crowdfunding they typically break it

0:13:55.959,0:13:59.620

down into three sections and these are

0:13:59.620,0:14:01.510

all two of them are exemptions from

0:14:01.510,0:14:03.519

registration and one of them actually is

0:14:03.519,0:14:06.100

is registering that security offering

0:14:06.100,0:14:11.680

title to was is essentially accredited

0:14:11.680,0:14:14.949

investor crowdfunding it’s it allows

0:14:14.949,0:14:19.209

people to have websites solicit market

0:14:19.209,0:14:22.510

billboards newspaper ads whatever they

0:14:22.510,0:14:26.529

want to help raise capital for their

0:14:26.529,0:14:28.390

company and more talking about this

0:14:28.390,0:14:29.709

we’re talking about issuers we’re

0:14:29.709,0:14:30.730

talking about the companies themselves

0:14:30.730,0:14:35.529

how are they raising that capital and

0:14:35.529,0:14:39.730

the only copy out there is that in and

0:14:39.730,0:14:45.790

the rule for that is 456 see was which

0:14:45.790,0:14:49.120

was just an expansion on regulation d &

0:14:49.120,0:14:53.560

and rule 506 the the requirement there

0:14:53.560,0:14:56.620

is that all the investors in that litter

0:14:56.620,0:15:00.310

that invest pursuant to that offering

0:15:00.310,0:15:06.520

must be accredited investors so

0:15:06.520,0:15:10.180

and then the other the other exemption

0:15:10.180,0:15:12.310

that was introduced into the jobs act

0:15:12.310,0:15:15.400

title 3 was rule 4 a 6 which allows

0:15:15.400,0:15:19.390

issuers to raise up to a million dollars

0:15:19.390,0:15:20.470

from accredited and non-accredited

0:15:20.470,0:15:23.920

investors there are limitations on how

0:15:23.920,0:15:27.370

much people can invest there are

0:15:27.370,0:15:29.620

limitations on how it can be done but

0:15:29.620,0:15:31.030

those are the tools when people think

0:15:31.030,0:15:32.980

crowdfunding that’s those are the two

0:15:32.980,0:15:34.450

exemptions are talking about and then

0:15:34.450,0:15:38.680

the other area which some argue isn’t

0:15:38.680,0:15:40.720

necessarily crowdfunding but it was part

0:15:40.720,0:15:43.660

of the jobs act is is are ready

0:15:43.660,0:15:46.120

reggae plus which is not an exemption

0:15:46.120,0:15:47.740

from registration but it’s actually a

0:15:47.740,0:15:50.410

registration of those securities it’s

0:15:50.410,0:15:55.510

like a mini public offering and so going

0:15:55.510,0:15:58.270

back to the question which night

0:15:58.270,0:16:02.650

hopefully i’m getting somewhat address

0:16:02.650,0:16:07.180

the even issuer again this is the

0:16:07.180,0:16:09.220

company trying to raise money whether

0:16:09.220,0:16:11.530

you eat whether it’s an SPD an operating

0:16:11.530,0:16:17.500

company goes to a site and you know

0:16:17.500,0:16:20.920

enlist with that platform and they’re

0:16:20.920,0:16:23.230

selling securities they’re relying on

0:16:23.230,0:16:26.770

the with respect to the exemption

0:16:26.770,0:16:28.180

they’re relying on those exemptions we

0:16:28.180,0:16:33.700

just talked about either 506 C or for a6

0:16:33.700,0:16:38.560

the issue of themselves to go out and

0:16:38.560,0:16:40.480

promote their deal and sell the deal

0:16:40.480,0:16:42.220

goes back to what brand was talking

0:16:42.220,0:16:44.500

about being they would qualify as is

0:16:44.500,0:16:47.350

issuer or under the issuer exemption so

0:16:47.350,0:16:48.850

they wouldn’t have to be registered as a

0:16:48.850,0:16:51.730

broker-dealer themselves to go and sell

0:16:51.730,0:16:54.430

that deal the platform depending on how

0:16:54.430,0:16:56.620

its compensated would either need to be

0:16:56.620,0:16:59.290

a broker-dealer working with a

0:16:59.290,0:17:01.060

broker-dealer if they’re taking

0:17:01.060,0:17:03.160

commissions or they’re not take

0:17:03.160,0:17:05.290

commissions and it’s just simply a like

0:17:05.290,0:17:08.740

brand talked about a a marketplace just

0:17:08.740,0:17:11.020

a listing site and they’re only you know

0:17:11.020,0:17:14.620

taking a flat fee then they wouldn’t

0:17:14.620,0:17:17.400

necessarily need to be broker-dealers

0:17:17.400,0:17:20.670

that even come close to her ear very

0:17:20.670,0:17:22.920

eloquent thank you so much so i would

0:17:22.920,0:17:26.160

couple questions on investor mouth not

0:17:26.160,0:17:29.250

not from the size of the investment but

0:17:29.250,0:17:32.040

how many investors that can participate

0:17:32.040,0:17:35.760

in different offering types so is there

0:17:35.760,0:17:38.160

an investor limit for example for a reg

0:17:38.160,0:17:41.370

D 506 see how many investors can I have

0:17:41.370,0:17:43.590

participate with crowdfunding as you

0:17:43.590,0:17:46.080

know there with the with the power of

0:17:46.080,0:17:48.060

the internet we’re now reaching more and

0:17:48.060,0:17:50.880

more investors we have the ability to

0:17:50.880,0:17:52.590

literally have thousands and thousands

0:17:52.590,0:17:53.820

of investors were seeing that on the

0:17:53.820,0:17:55.950

record plus deals thousands and

0:17:55.950,0:17:57.330

thousands of esters participating in a

0:17:57.330,0:17:58.890

single deal now

0:17:58.890,0:18:00.810

nevermind the practicality of having

0:18:00.810,0:18:02.430

thousands of esters never see one-year

0:18:02.430,0:18:06.450

deals but from a legal perspective is

0:18:06.450,0:18:09.390

there a ready limit for how many

0:18:09.390,0:18:11.580

investors I can have participate in a

0:18:11.580,0:18:13.230

deal

0:18:13.230,0:18:16.290

I again depends on which offering that’s

0:18:16.290,0:18:20.580

just a 50 60 HZ CMB yeah they’re there

0:18:20.580,0:18:22.530

are you can have up to 2,000 passengers

0:18:22.530,0:18:26.700

2000 busters perfect and for both of

0:18:26.700,0:18:28.350

those is the limit of two thousand

0:18:28.350,0:18:31.950

correct now with so 506 B we didn’t talk

0:18:31.950,0:18:33.450

about that that’s the traditional

0:18:33.450,0:18:35.640

private placement exemption it’s the

0:18:35.640,0:18:40.620

safe harbor that the SEC provided the

0:18:40.620,0:18:42.720

safe harbor for for a non public

0:18:42.720,0:18:46.260

offering and what that typically allowed

0:18:46.260,0:18:48.660

is it allowed investors again the same

0:18:48.660,0:18:52.080

limitations but you could have you can

0:18:52.080,0:18:54.870

raise unlimited amount and that that

0:18:54.870,0:18:58.470

exemption allows up up to 35

0:18:58.470,0:19:00.900

non-accredited investors however under

0:19:00.900,0:19:04.140

506 B you can generally solicit and you

0:19:04.140,0:19:07.080

have to provide if you do have

0:19:07.080,0:19:09.690

non-accredited investors to financial

0:19:09.690,0:19:13.500

disclosures or are amped up you have to

0:19:13.500,0:19:15.690

either have reviewed or audited

0:19:15.690,0:19:17.610

financial statements that a lot of

0:19:17.610,0:19:20.640

people I i strongly discourage people to

0:19:20.640,0:19:26.190

from using 506 B unless it’s and having

0:19:26.190,0:19:27.870

a credit invest non-accredited investors

0:19:27.870,0:19:30.040

in that race because it’s

0:19:30.040,0:19:34.120

it’s just because of the financial

0:19:34.120,0:19:35.920

requirements you have to worry about

0:19:35.920,0:19:39.220

title 3 in order plus are there any will

0:19:39.220,0:19:42.040

written limits to how many investors can

0:19:42.040,0:19:43.750

participate in any either one of those

0:19:43.750,0:19:46.600

offering types so regular plus it there

0:19:46.600,0:19:48.670

aren’t any limitations per se can you

0:19:48.670,0:19:52.900

think you have to get the fun part about

0:19:52.900,0:19:55.270

securities laws and I get this all the

0:19:55.270,0:19:59.320

time then I sort of talk myself into it

0:19:59.320,0:20:02.890

yeah 3 but there’s these different I i

0:20:02.890,0:20:04.240

like to explain that there’s different

0:20:04.240,0:20:06.880

silos of regulations you have to comply

0:20:06.880,0:20:11.140

with and most people they all blur

0:20:11.140,0:20:13.120

together they’ll say well what about the

0:20:13.120,0:20:16.060

100 personal invitation or what about

0:20:16.060,0:20:17.740

this or whatever farmed forget

0:20:17.740,0:20:22.960

yeah and so um and in really so you have

0:20:22.960,0:20:24.400

to kind of keep all of the regulations

0:20:24.400,0:20:27.130

the different acts in their own silent

0:20:27.130,0:20:29.080

and navigate through that and that’s why

0:20:29.080,0:20:32.860

this is such a I guess mind-boggling

0:20:32.860,0:20:34.510

area of law but difficult course they’ll

0:20:34.510,0:20:35.740

get ya thang

0:20:35.740,0:20:39.040

so going back to questions so under a I

0:20:39.040,0:20:41.680

think you asked if under Title III or

0:20:41.680,0:20:44.110

reggae plus if there are limits title

0:20:44.110,0:20:48.910

three there aren’t any limits right plus

0:20:48.910,0:20:51.490

there aren’t any limits on the number of

0:20:51.490,0:20:57.040

investors / say however you get into if

0:20:57.040,0:21:04.750

you get into I reggae plus and it’s a

0:21:04.750,0:21:09.040

tier-two rate plus offering to go

0:21:09.040,0:21:11.230

through million you have 250 million and

0:21:11.230,0:21:12.790

there are certain limitations that apply

0:21:12.790,0:21:15.400

to how many non-accredited investors you

0:21:15.400,0:21:19.450

can have in that race so there the

0:21:19.450,0:21:23.530

answer to those questions is your again

0:21:23.530,0:21:24.970

goes back to the hands on what you’re

0:21:24.970,0:21:27.820

doing and how you’re doing it but just

0:21:27.820,0:21:29.980

the across-the-board answer on those is

0:21:29.980,0:21:31.630

no there aren’t any limitations on those

0:21:31.630,0:21:34.540

two types Duchess

0:21:34.540,0:21:41.200

d let’s talk about a little bit of blue

0:21:41.200,0:21:42.340

sky laws

0:21:42.340,0:21:46.120

there’s a lot of questions that I think

0:21:46.120,0:21:48.190

that come from people jumping into the

0:21:48.190,0:21:51.940

space whether the registration

0:21:51.940,0:21:53.559

individual states is still required

0:21:53.559,0:21:56.409

under these new guidelines and even the

0:21:56.409,0:21:58.990

old guidelines right the arrows heard

0:21:58.990,0:22:01.150

that the laws of change you know hooray

0:22:01.150,0:22:03.460

hooray we could get my internet we got a

0:22:03.460,0:22:05.380

crowd in a great portal eccentric cetera

0:22:05.380,0:22:08.380

but what do we still have to do it in

0:22:08.380,0:22:10.750

the day what’s really changed what

0:22:10.750,0:22:12.549

stayed the same what’s a blue sky law

0:22:12.549,0:22:16.240

and what I have to do about it and where

0:22:16.240,0:22:18.190

do you see people stumbling on the blue

0:22:18.190,0:22:20.860

sky in the blue sky area so can be fined

0:22:20.860,0:22:23.440

for us among many highlights some

0:22:23.440,0:22:24.640

gotchas

0:22:24.640,0:22:28.090

ok so blue sky when people refer to blue

0:22:28.090,0:22:31.929

sky laws that’s just their referring to

0:22:31.929,0:22:35.860

the state the state street lights state

0:22:35.860,0:22:39.250

requirements each state so going back to

0:22:39.250,0:22:44.049

our you know 10th grade civics class we

0:22:44.049,0:22:46.510

have we have federal and state laws the

0:22:46.510,0:22:52.179

SEC obviously is the governing body for

0:22:52.179,0:22:56.169

the federal with respect federal

0:22:56.169,0:22:58.840

legislation and the securities laws and

0:22:58.840,0:23:00.940

then each state will have their own step

0:23:00.940,0:23:04.059

separate state securities division and

0:23:04.059,0:23:12.610

and laws so for a under Rule 506

0:23:12.610,0:23:16.210

Regulation D what what that is is that

0:23:16.210,0:23:19.390

is a federal exemption from registration

0:23:19.390,0:23:26.799

but each state has their own so in order

0:23:26.799,0:23:30.580

to meet that requirement you have to for

0:23:30.580,0:23:33.340

example follow the federal you have to

0:23:33.340,0:23:34.990

follow the the federal rules but each

0:23:34.990,0:23:36.610

state also has their own requirements as

0:23:36.610,0:23:41.440

well so that anything that are 506 I

0:23:41.440,0:23:43.960

need anything under Regulation D 506 C

0:23:43.960,0:23:47.440

or B you still have to comply with the

0:23:47.440,0:23:48.640

state laws or the blue sky laws

0:23:48.640,0:23:51.669

typically what that means is these are

0:23:51.669,0:23:53.500

filing done in the right d which means

0:23:53.500,0:23:55.000

you have to file a Form D

0:23:55.000,0:23:58.120

with the sec that’s filed online but

0:23:58.120,0:24:00.730

each state has notice requirements that

0:24:00.730,0:24:02.860

have to go to go along with that

0:24:02.860,0:24:05.260

so you have two in every state where you

0:24:05.260,0:24:08.920

sold securities you have to provide and

0:24:08.920,0:24:10.630

notice no they don’t have to prove that

0:24:10.630,0:24:13.390

that filing but they have to be notified

0:24:13.390,0:24:15.730

of it and each day typically charges a

0:24:15.730,0:24:17.770

fee associated so finding a raise and

0:24:17.770,0:24:20.260

itouch fiber to different states

0:24:20.260,0:24:22.870

I then should expect to give notice to

0:24:22.870,0:24:26.080

those fiber 10 different states upon

0:24:26.080,0:24:28.270

closure of that race yeah if you’re if

0:24:28.270,0:24:30.820

you’re doing the raised under reg D

0:24:30.820,0:24:33.580

unless you’re required to notify each of

0:24:33.580,0:24:36.190

those states and I said each state and

0:24:36.190,0:24:38.860

there’s typically a fee for it

0:24:38.860,0:24:40.600

what’s a typical fee for the four

0:24:40.600,0:24:42.820

hundred dollars hundred dollars hundred

0:24:42.820,0:24:48.370

twenty-five dollars and so that’s with

0:24:48.370,0:24:51.490

respect to to no title to 50 60

0:24:51.490,0:24:54.490

offerings there was no there there

0:24:54.490,0:24:58.270

wasn’t a state preemption you did you

0:24:58.270,0:25:00.490

have to continue to comply with the blue

0:25:00.490,0:25:04.690

sky laws which which luckily 506 a reg D

0:25:04.690,0:25:10.750

it preempts the state’s review typically

0:25:10.750,0:25:15.520

generally but the states have can still

0:25:15.520,0:25:20.890

require a notice filing under title 3 or

0:25:20.890,0:25:28.030

break CF 446 the states are preempted

0:25:28.030,0:25:32.290

from it that it’s a federal rule that

0:25:32.290,0:25:34.150

preempts the states from reviewing those

0:25:34.150,0:25:37.720

filing so a somebody and ensure that is

0:25:37.720,0:25:42.490

raising securities under 4 a-6 they file

0:25:42.490,0:25:46.330

with the SEC they file their form C and

0:25:46.330,0:25:50.410

they don’t they don’t have to go to each

0:25:50.410,0:25:52.570

state and qualify that offering which is

0:25:52.570,0:25:54.580

one of the the heat difference if it’s

0:25:54.580,0:25:57.670

there was we both unite at that

0:25:57.670,0:26:02.350

conference in Las Vegas Larry zeros and

0:26:02.350,0:26:04.360

we had a couple there are real estate

0:26:04.360,0:26:06.580

regulators out there and they will know

0:26:06.580,0:26:07.840

we would still require

0:26:07.840,0:26:11.679

qualifying and all the office security

0:26:11.679,0:26:13.299

then we’re going to start freaking out

0:26:13.299,0:26:15.460

we all start liking each other like this

0:26:15.460,0:26:16.330

you know

0:26:16.330,0:26:17.590

yeah everyone in the audience got a

0:26:17.590,0:26:19.570

little excited because i think the state

0:26:19.570,0:26:21.730

of Texas and I forget the other state

0:26:21.730,0:26:24.070

mentioned that we don’t see any

0:26:24.070,0:26:25.990

difference in the air one has to file

0:26:25.990,0:26:29.049

and with the small protest they said

0:26:29.049,0:26:31.150

well yeah we’re wrong and you guys are

0:26:31.150,0:26:34.210

right and the the the panel went on his

0:26:34.210,0:26:35.230

plans

0:26:35.230,0:26:38.830

um so going for a as a couple people of

0:26:38.830,0:26:41.919

Texas and you know what’s an SPV SPV is

0:26:41.919,0:26:44.830

a special purpose vehicle so it’s an LLC

0:26:44.830,0:26:48.700

or an LP or c-corp that’s created to

0:26:48.700,0:26:50.679

specifically raise capital for that

0:26:50.679,0:26:52.179

particular asset whether it’s real

0:26:52.179,0:26:55.510

estate or business or acceptance so many

0:26:55.510,0:26:57.190

times in crowdfunding different

0:26:57.190,0:27:01.029

strategies is to create a SPV for that

0:27:01.029,0:27:04.120

raise and maybe you could expand on that

0:27:04.120,0:27:06.220

a little yeah correct branded a great

0:27:06.220,0:27:09.460

job so yeah spb your SP special purpose

0:27:09.460,0:27:13.120

entity I you’ll see it used a lot in in

0:27:13.120,0:27:16.779

real estate investing where they’ll form

0:27:16.779,0:27:19.059

this again special purpose entity that’s

0:27:19.059,0:27:21.549

form just for the purpose of buying a

0:27:21.549,0:27:23.799

piece of of real estate or buying an

0:27:23.799,0:27:27.940

asset you’ll see it i know that on the

0:27:27.940,0:27:31.840

equity side for example angels list or

0:27:31.840,0:27:37.270

seed invest all of their deals the way

0:27:37.270,0:27:40.029

that they their structure is they will

0:27:40.029,0:27:41.529

if you invest in one of those you’re

0:27:41.529,0:27:44.110

actually investing into an and an SPV

0:27:44.110,0:27:47.049

that pool basically pulls all the

0:27:47.049,0:27:49.419

investors and then that entity will

0:27:49.419,0:27:53.020

invest into the issue which what it does

0:27:53.020,0:27:55.450

in in that situation is that it allows

0:27:55.450,0:27:59.950

it

0:27:59.950,0:28:02.350

it decreases or eliminate the problem of

0:28:02.350,0:28:05.919

that issuer suddenly having 50 new

0:28:05.919,0:28:07.360

shareholders that they have to deal with

0:28:07.360,0:28:10.419

so the use of NSB allows you to

0:28:10.419,0:28:13.149

basically one shareholder one equity

0:28:13.149,0:28:16.179

holder in that issuer or with respect to

0:28:16.179,0:28:18.789

real estate it’s just it allows rather

0:28:18.789,0:28:20.179

than trying to put

0:28:20.179,0:28:22.909

you know 50 people on title to a project

0:28:22.909,0:28:27.470

it basically allows that into detail on

0:28:27.470,0:28:32.600

the asset and and the rules between them

0:28:32.600,0:28:36.350

and that the agreements between the

0:28:36.350,0:28:38.690

members to be decided that level rather

0:28:38.690,0:28:43.009

than any asset level each investors than

0:28:43.009,0:28:45.649

a partner in that SPV cracked

0:28:45.649,0:28:48.619

yeah let’s tackle maybe you’re going to

0:28:48.619,0:28:50.179

a rabbit hole but are you familiar with

0:28:50.179,0:28:53.929

rule 3 a 4 184 where it talks about

0:28:53.929,0:28:57.440

activities test that ring a bell it off

0:28:57.440,0:29:02.090

so the Germans asking you know he sees a

0:29:02.090,0:29:03.889

number of real estate portal promoting

0:29:03.889,0:29:05.720

multiple investment opportunities as a

0:29:05.720,0:29:08.509

direct issuer and according to his

0:29:08.509,0:29:10.549

interpretation of the rule they should

0:29:10.549,0:29:12.590

only be doing one per 12-month period

0:29:12.590,0:29:14.840

and so easy

0:29:14.840,0:29:16.909

this looks like a conflict between what

0:29:16.909,0:29:19.369

he is interpretation of given rule is

0:29:19.369,0:29:21.350

and what you see in the marketplace I

0:29:21.350,0:29:22.549

don’t know if you’ve seen the same thing

0:29:22.549,0:29:25.070

or what I think he’s when I think he’s

0:29:25.070,0:29:28.759

going with is the tour the issuer

0:29:28.759,0:29:33.320

exemption by basically saying hey the

0:29:33.320,0:29:39.139

the and this goes back to our discussion

0:29:39.139,0:29:41.509

about prefer dealers if an issue is

0:29:41.509,0:29:43.700

going out and raising money for

0:29:43.700,0:29:47.090

themselves or your issue agents raising

0:29:47.090,0:29:49.340

money then they they typically can raise

0:29:49.340,0:29:51.320

money for that in one entity within the

0:29:51.320,0:29:53.509

12-month period but if they start

0:29:53.509,0:29:56.629

raising money for multiple entities then

0:29:56.629,0:29:58.999

they’re crossing over into broker-dealer

0:29:58.999,0:30:00.950

world and i think that’s so if i have to

0:30:00.950,0:30:02.899

necessarily v’s just glue i just learned

0:30:02.899,0:30:04.879

with SPD is it sounds great i could do

0:30:04.879,0:30:07.879

five or ten SPVs and i started juggling

0:30:07.879,0:30:12.019

fire multiple SPVs you start to get to

0:30:12.019,0:30:14.480

potentially a very gray or danger zone

0:30:14.480,0:30:18.139

of or a clear-cut case of need to be

0:30:18.139,0:30:21.590

having licenses to appropriately do that

0:30:21.590,0:30:23.749

without getting in trouble potential

0:30:23.749,0:30:25.340

future correcting you see that a lot

0:30:25.340,0:30:28.549

where people go and say well I’m you

0:30:28.549,0:30:30.980

know I’m a manager this entity so i can

0:30:30.980,0:30:31.779

raise cash

0:30:31.779,0:30:33.429

office and you’ll see people that we’ll

0:30:33.429,0:30:36.249

just they’ll be manager multiple

0:30:36.249,0:30:38.080

entities that are all raising capital

0:30:38.080,0:30:40.629

and that definitely does get into a

0:30:40.629,0:30:42.099

grave not

0:30:42.099,0:30:44.739

hey I don’t know what you’d call a red

0:30:44.739,0:30:50.529

so area so interesting that was good so

0:30:50.529,0:30:52.330

what about title three and on a title

0:30:52.330,0:30:54.340

three portal you know the reason why

0:30:54.340,0:30:56.710

people love crowdfunding is because

0:30:56.710,0:30:59.200

obviously investor prohibition is over

0:30:59.200,0:31:03.460

be able to to market now via billboards

0:31:03.460,0:31:05.979

internet marketing multiple different

0:31:05.979,0:31:08.469

methods methodologies including the

0:31:08.469,0:31:13.779

internet and however the geniuses that

0:31:13.779,0:31:16.149

wrote the title three gave some really

0:31:16.149,0:31:18.249

interesting guidelines as it relates to

0:31:18.249,0:31:21.369

what the portal gets to promote and what

0:31:21.369,0:31:24.190

the issue does get to promote as it

0:31:24.190,0:31:27.219

relates to directory or other related to

0:31:27.219,0:31:29.589

promoting the direct offer so if we

0:31:29.589,0:31:31.239

could talk a little bit about that as

0:31:31.239,0:31:35.409

far as a title three scenario the the

0:31:35.409,0:31:38.349

portals have the ability to top you

0:31:38.349,0:31:39.820

could you can promote the portal but you

0:31:39.820,0:31:42.339

can’t promote the offer you help us

0:31:42.339,0:31:44.619

understand that a little bit better so

0:31:44.619,0:31:49.809

and I think he’s you said a lot of that

0:31:49.809,0:31:52.330

you did a good job always let you keep

0:31:52.330,0:31:52.989

talking

0:31:52.989,0:31:58.179

yeah be so with respect to a title three

0:31:58.179,0:32:00.969

or I’m sorry and I can’t throw around

0:32:00.969,0:32:05.649

the title three break cf44 a 6 i’m

0:32:05.649,0:32:07.210

talking about the same thing

0:32:07.210,0:32:10.330

hcf is just regulation crowdfunding and

0:32:10.330,0:32:14.830

46 is the actual exemption beat so i

0:32:14.830,0:32:16.960

guess to go back a little bit before an

0:32:16.960,0:32:20.019

issuer or before the issuer starts

0:32:20.019,0:32:21.820

raising money they can’t say anything so

0:32:21.820,0:32:24.940

there’s not a a test the waters . where

0:32:24.940,0:32:26.499

you can go out and say or think about

0:32:26.499,0:32:29.229

raising capital you know everybody that

0:32:29.229,0:32:30.909

thinks we should that would want to

0:32:30.909,0:32:32.619

invest you know like our facebook page

0:32:32.619,0:32:36.429

or whatever it pause okay so you telling

0:32:36.429,0:32:38.830

me i don’t know what i want to go ready

0:32:38.830,0:32:42.249

plus right d title 3 that’s all Chinese

0:32:42.249,0:32:45.250

to me I go because I can

0:32:45.250,0:32:48.580

and post my or because i think i can I

0:32:48.580,0:32:51.640

go and post something online saying how

0:32:51.640,0:32:53.800

many people want to buy my widget or

0:32:53.800,0:32:56.020

invest in my company making a huge

0:32:56.020,0:32:58.870

response is that testing the waters what

0:32:58.870,0:33:01.570

is testing the waters before I’ve gone

0:33:01.570,0:33:04.720

too far and now i can do raise money

0:33:04.720,0:33:06.970

through title 3 is that is that defined

0:33:06.970,0:33:10.600

yet silly this is where it’s just like

0:33:10.600,0:33:14.410

crocodile-infested waters i think that

0:33:14.410,0:33:19.570

thinking so i’m starting a capital

0:33:19.570,0:33:22.630

raised and I do that ok now i haven’t

0:33:22.630,0:33:24.760

shut the door on going on raising

0:33:24.760,0:33:25.570

capital

0:33:25.570,0:33:28.930

hey you know I’ve got 10,000 followers

0:33:28.930,0:33:30.670

on facebook and I say hey would any of

0:33:30.670,0:33:31.870

you guys be interested would anybody

0:33:31.870,0:33:34.120

want to another continent thousand

0:33:34.120,0:33:35.710

closest friends and family have whatever

0:33:35.710,0:33:38.320

yeah and they say and they say yeah I

0:33:38.320,0:33:40.180

would invest that’s great

0:33:40.180,0:33:44.410

ok you could then go and do a capital

0:33:44.410,0:33:47.560

raised under under at title to a final

0:33:47.560,0:33:50.650

60 you can go to a reggae offering but

0:33:50.650,0:33:54.790

but technically you couldn’t do you do

0:33:54.790,0:33:56.350

at that point you would be there with

0:33:56.350,0:33:58.720

limited from that you just qualify you

0:33:58.720,0:34:02.950

by the local law for title 3 raise so if

0:34:02.950,0:34:05.020

you want to keep the title 3 raise

0:34:05.020,0:34:06.790

option open

0:34:06.790,0:34:10.030

yeah there’s what what can’t you do you

0:34:10.030,0:34:11.710

can’t do what I just said

0:34:11.710,0:34:15.399

and you know i guess i work with a few

0:34:15.399,0:34:17.740

company if you marketing companies in

0:34:17.740,0:34:20.409

this area and as you can imagine they’re

0:34:20.409,0:34:25.060

always trying to sort of press and say

0:34:25.060,0:34:27.399

what can we do because that’s that’s

0:34:27.399,0:34:29.470

fantastic and there’s been a lot of

0:34:29.470,0:34:31.600

things you know myself and my colleagues

0:34:31.600,0:34:33.460

have had conversations with the SEC and

0:34:33.460,0:34:35.919

the SEC is some cases the surprises by

0:34:35.919,0:34:40.450

saying that’s probably ok but the SEC

0:34:40.450,0:34:42.310

has said hey it’s okay if you want to

0:34:42.310,0:34:45.790

you know be vague if you want to talk to

0:34:45.790,0:34:47.889

again you want to talk to people around

0:34:47.889,0:34:50.139

you in sort of an ngon general

0:34:50.139,0:34:52.060

solicitation way and say hey you think

0:34:52.060,0:34:53.500

about doing this raised you think that’s

0:34:53.500,0:34:54.280

a good idea

0:34:54.280,0:34:56.320

that’s fine that’s not necessary testing

0:34:56.320,0:34:57.160

the water

0:34:57.160,0:35:01.150

sending out a you know a few ppl on the

0:35:01.150,0:35:03.640

floor sending out of a blast to your you

0:35:03.640,0:35:05.799

know to your facebook followers on

0:35:05.799,0:35:08.319

Instagram saying hey would you be

0:35:08.319,0:35:09.549

interested

0:35:09.549,0:35:11.920

that probably is now you could be really

0:35:11.920,0:35:15.940

you know there’s there’s the gray area

0:35:15.940,0:35:18.220

is what activities can you do you need

0:35:18.220,0:35:20.829

to start sort of ramping up your

0:35:20.829,0:35:23.710

marketing and saying you know like

0:35:23.710,0:35:25.030

here’s your chance to become part of a

0:35:25.030,0:35:27.430

company bit there’s if you start ramping

0:35:27.430,0:35:29.589

up before your title three offering

0:35:29.589,0:35:33.430

commences with marketing set the SEC

0:35:33.430,0:35:34.569

might look at that and said hey you’re

0:35:34.569,0:35:35.980

just trying to condition the market

0:35:35.980,0:35:38.589

that’s not pot that’s not permitted

0:35:38.589,0:35:40.480

so do you have it off to the portal

0:35:40.480,0:35:42.460

event for them to do that work is so you

0:35:42.460,0:35:44.619

stay clean as I was not the intent of

0:35:44.619,0:35:45.220

the law

0:35:45.220,0:35:48.369

ESO the portal so the lot the way it’s

0:35:48.369,0:35:50.470

written is that you can’t do anything

0:35:50.470,0:35:53.530

before you command your offering which

0:35:53.530,0:35:56.980

commences with filing your form see her

0:35:56.980,0:35:58.869

with the sec so once you file your form

0:35:58.869,0:36:01.510

C then you can go out and you can

0:36:01.510,0:36:04.270

promote your offering and going back so

0:36:04.270,0:36:05.470

that goes back to the question that

0:36:05.470,0:36:08.710

you’d asked now ten minutes ago before I

0:36:08.710,0:36:15.400

went down there travel if you so at that

0:36:15.400,0:36:16.420

point you’re you

0:36:16.420,0:36:17.710

they filed their form see their

0:36:17.710,0:36:20.859

offerings live it’s up on their ports up

0:36:20.859,0:36:25.329

on a platform the portal itself can go

0:36:25.329,0:36:28.750

out and they cannot go promote an

0:36:28.750,0:36:32.349

individual offering they can promote

0:36:32.349,0:36:35.589

their portal they can say come to our

0:36:35.589,0:36:38.349

portal on and they can even promote

0:36:38.349,0:36:40.539

their portal by saying it we’ve got

0:36:40.539,0:36:46.960

offerings like this but they can’t they

0:36:46.960,0:36:48.910

can’t advertiser or market-specific

0:36:48.910,0:36:52.210

offering the issuer can go out and say

0:36:52.210,0:36:54.970

hey we’re doing an offering

0:36:54.970,0:36:56.680

however the issuer has to be careful

0:36:56.680,0:36:58.690

because they really are limited in what

0:36:58.690,0:37:00.369

they can say and there’s sort of two

0:37:00.369,0:37:05.049

types of advertising or marketing i can

0:37:05.049,0:37:07.120

do one is what’s called it

0:37:07.120,0:37:10.360

tombstone type ad which is has very

0:37:10.360,0:37:14.380

limited limited information

0:37:14.380,0:37:16.510

yeah content which is it’s basically hey

0:37:16.510,0:37:18.220

we’re conducting an offering

0:37:18.220,0:37:20.320

here’s the portal where you can find

0:37:20.320,0:37:22.000

more information

0:37:22.000,0:37:23.950

here’s the terms you can say they were

0:37:23.950,0:37:30.310

offering you know series b LC interests

0:37:30.310,0:37:33.760

and or offering you a two-year

0:37:33.760,0:37:35.440

convertible note something like that

0:37:35.440,0:37:37.600

they can provide a little bit of

0:37:37.600,0:37:38.980

information about the company itself

0:37:38.980,0:37:41.740

about the issue of themselves and they

0:37:41.740,0:37:45.190

can and in their products now where it’s

0:37:45.190,0:37:46.810

got into gray areas to say welcome those

0:37:46.810,0:37:49.840

tombstones have a video work in the

0:37:49.840,0:37:52.990

tombstones have graphics and that’s

0:37:52.990,0:37:54.580

where you get into delicious

0:37:54.580,0:37:57.670

yeah going to end and the sec said yeah

0:37:57.670,0:38:00.280

as long as it still is limited to a

0:38:00.280,0:38:04.030

brief description of the company or so

0:38:04.030,0:38:06.250

species the business playing along for

0:38:06.250,0:38:07.840

guessing it leads me to another question

0:38:07.840,0:38:12.730

what’s your intern what’s been your your

0:38:12.730,0:38:16.240

experience working more closely with the

0:38:16.240,0:38:18.220

sec and finra through the new

0:38:18.220,0:38:19.540

regulations

0:38:19.540,0:38:22.870

what’s their current posture and you

0:38:22.870,0:38:24.850

think they’re they’re going and of

0:38:24.850,0:38:26.770

crowdfunding friendly manner

0:38:26.770,0:38:27.910

are they putting up more roadblocks

0:38:27.910,0:38:30.910

what’s what do you see coming from them

0:38:30.910,0:38:34.300

from a as as people start to work with

0:38:34.300,0:38:37.420

more what are you saying so I think and

0:38:37.420,0:38:40.870

you know I’m not a definitive voice on

0:38:40.870,0:38:42.520

this and perhaps on my colleagues had

0:38:42.520,0:38:44.650

different experiences by in my

0:38:44.650,0:38:50.860

experience over the last few years it’s

0:38:50.860,0:38:53.380

been the sec i think is I think they

0:38:53.380,0:38:55.720

want this to happen i think they played

0:38:55.720,0:38:57.460

ball pretty well I’ve heard the Sun

0:38:57.460,0:39:01.030

where you’re starting to see and I think

0:39:01.030,0:39:03.550

it makes sense but we’re starting to see

0:39:03.550,0:39:05.980

some pushback and it may not push back

0:39:05.980,0:39:07.450

but where that the more difficult ones

0:39:07.450,0:39:11.110

with FINRA and that’s probably because

0:39:11.110,0:39:12.670

they are the ones that have been tasked

0:39:12.670,0:39:15.250

with regulating this and with monitoring

0:39:15.250,0:39:18.560

all this behavior and I think

0:39:18.560,0:39:23.030

and on that we can talk about that but

0:39:23.030,0:39:24.590

when you see the registration of a

0:39:24.590,0:39:27.590

portal the SEC process I mean it’s you

0:39:27.590,0:39:31.040

file your you’re good there’s no review

0:39:31.040,0:39:33.080

process they really dumped the entire

0:39:33.080,0:39:36.110

review process on FINRA so fingers had

0:39:36.110,0:39:37.850

the one that’s happy to regulate police

0:39:37.850,0:39:40.610

this and so you’re seeing announced I i

0:39:40.610,0:39:42.740

think that they’re co-operators being

0:39:42.740,0:39:43.700

careful

0:39:43.700,0:39:45.740

yeah they’re not allowing to not be

0:39:45.740,0:39:48.290

adversarial now now they would probably

0:39:48.290,0:39:50.630

cautious maybe after forward

0:39:50.630,0:39:53.180

yeah and and i think that i think that

0:39:53.180,0:39:56.630

makes sense again that it’s a I this is

0:39:56.630,0:39:58.790

a new area and there’s a little bit of

0:39:58.790,0:40:04.070

that caution that everybody’s taking as

0:40:04.070,0:40:05.660

they look at this

0:40:05.660,0:40:07.640

so we’re kind of a phenomenon that’s

0:40:07.640,0:40:09.980

happening with funds and rates they seem

0:40:09.980,0:40:12.530

to be its gravitational pull towards

0:40:12.530,0:40:14.420

crowdfunding right it’s now there’s this

0:40:14.420,0:40:17.480

this vehicle to get my fund and reach to

0:40:17.480,0:40:20.810

the general public and I I don’t know if

0:40:20.810,0:40:23.150

there’s an actual spike and rates are

0:40:23.150,0:40:24.860

spikin funds but there’s certainly a lot

0:40:24.860,0:40:26.690

coming into the marketplace

0:40:26.690,0:40:30.200

um is there any special needs for

0:40:30.200,0:40:32.660

setting up a reit on a crown front

0:40:32.660,0:40:35.450

platform that should be considered by

0:40:35.450,0:40:36.470

the issue is it

0:40:36.470,0:40:37.820

are there any rules is there anything

0:40:37.820,0:40:41.030

other than a typical scenario that that

0:40:41.030,0:40:42.560

they should be aware of if they go hey

0:40:42.560,0:40:46.850

I’m a fund our promo manager reach the

0:40:46.850,0:40:49.100

rules change for them but under level

0:40:49.100,0:40:53.120

now and again it really goes i mean i

0:40:53.120,0:40:56.000

read is is really advanced attacks its

0:40:56.000,0:41:01.730

creation tax lot fondest is just a sec a

0:41:01.730,0:41:04.550

pool that a group of investors that if

0:41:04.550,0:41:08.030

earth i come together for the specific

0:41:08.030,0:41:10.400

purpose to make certain types of

0:41:10.400,0:41:12.800

investments so all the typical

0:41:12.800,0:41:15.170

securities laws that previously apply

0:41:15.170,0:41:18.380

investment company Act investment

0:41:18.380,0:41:19.820

advisor all those things are going to

0:41:19.820,0:41:22.910

continue to apply just as though this

0:41:22.910,0:41:25.670

you know the JOBS Act never came forth

0:41:25.670,0:41:28.550

all all that the jobs that does weather

0:41:28.550,0:41:29.690

is it

0:41:29.690,0:41:32.000

it provides like you said

0:41:32.000,0:41:33.770

an avenue for them to better promote

0:41:33.770,0:41:36.620

their deal i was general counsel and

0:41:36.620,0:41:39.170

managing director for a large hedge fund

0:41:39.170,0:41:42.440

for about five years before i went back

0:41:42.440,0:41:45.710

into private practice and all the

0:41:45.710,0:41:47.840

capital raising we did there was was

0:41:47.840,0:41:50.900

developing relationships meeting with

0:41:50.900,0:41:58.220

people in person and so it the what

0:41:58.220,0:41:59.840

crowdfunding does it allows you to go

0:41:59.840,0:42:01.850

out and set here here’s my read put it

0:42:01.850,0:42:03.830

online and allows you to market that

0:42:03.830,0:42:08.840

better and so the rules are you know a

0:42:08.840,0:42:10.550

lot of the rules just stay the same

0:42:10.550,0:42:11.810

you obviously have to disclose your

0:42:11.810,0:42:13.640

additional disclosures and just things

0:42:13.640,0:42:16.160

you have to worry about but a lot of the

0:42:16.160,0:42:19.700

rules stay the same great so here we

0:42:19.700,0:42:21.500

have a quite a question from religious

0:42:21.500,0:42:23.690

person says if I build real estate

0:42:23.690,0:42:25.790

corporation invested a hundred thousand

0:42:25.790,0:42:27.950

dollars to start it then gonna raise

0:42:27.950,0:42:30.470

another half-million for portion for

0:42:30.470,0:42:32.960

portion of the company can I pull some

0:42:32.960,0:42:35.120

kind of shot myself after the Rays for

0:42:35.120,0:42:40.010

myself after the Rays yeah there’s a

0:42:40.010,0:42:43.130

curveball for it yeah now you’d have to

0:42:43.130,0:42:45.950

disclose that you’re offering documents

0:42:45.950,0:42:49.040

you know that there is a ppm or however

0:42:49.040,0:42:51.350

you’re raising that money i would say

0:42:51.350,0:42:53.480

your use of proceeds would you know in

0:42:53.480,0:42:55.220

your use of proceeds section you have to

0:42:55.220,0:42:59.480

say $100,000 this is going to pay you on

0:42:59.480,0:43:02.600

your back and you know it’s it sounds

0:43:02.600,0:43:04.910

kind of nefarious but it’s not that

0:43:04.910,0:43:06.200

uncommon a lot of times you’ll see

0:43:06.200,0:43:07.880

founders will come in and they’ll put

0:43:07.880,0:43:09.440

some money and then i’ll put it in the

0:43:09.440,0:43:12.380

form of debt right to put in a note and

0:43:12.380,0:43:15.980

so that no it has to be repaid back and

0:43:15.980,0:43:17.840

as long as in your use of proceeds it

0:43:17.840,0:43:19.310

shows that money is going to pay the

0:43:19.310,0:43:20.990

founder back that’s fine

0:43:20.990,0:43:24.290

a lot of times but you know they whether

0:43:24.290,0:43:26.720

it’s legal whether it work is two

0:43:26.720,0:43:28.640

different questions I ask clients that

0:43:28.640,0:43:30.440

all the time people ask me if it’s for

0:43:30.440,0:43:32.180

people ask me if it’s legal and I said

0:43:32.180,0:43:35.510

yeah it’s legal but to market that you

0:43:35.510,0:43:37.100

know investors can be really excited

0:43:37.100,0:43:38.540

invest in something where they know the

0:43:38.540,0:43:40.580

first hundred thousand is just going

0:43:40.580,0:43:42.609

back to to them

0:43:42.609,0:43:43.869

desert or you know when you see this

0:43:43.869,0:43:46.960

with salaries to you by is I by startups

0:43:46.960,0:43:48.519

I always tell him you got to be careful

0:43:48.519,0:43:52.119

with with the salaries because it all if

0:43:52.119,0:43:54.609

investors money is just going to pay you

0:43:54.609,0:43:58.690

know I a high salary for the CEO that’s

0:43:58.690,0:44:02.559

maybe not the best use of proceeds so um

0:44:02.559,0:44:04.359

here’s another changeup

0:44:04.359,0:44:07.059

uh we have a German asking what is the

0:44:07.059,0:44:09.160

difference between Airbnb taking a

0:44:09.160,0:44:11.650

processing fee and a realtor agent

0:44:11.650,0:44:13.869

taking a commission is it all about

0:44:13.869,0:44:18.130

worrying or is there is this is the same

0:44:18.130,0:44:21.819

concept is crowdfunding and legally I i

0:44:21.819,0:44:23.470

don’t know if this is even crowdfunding

0:44:23.470,0:44:25.989

and I’m not so let’s just think about

0:44:25.989,0:44:29.619

are you familiar with can real estate

0:44:29.619,0:44:33.099

agents get commissioned on real estate

0:44:33.099,0:44:37.029

deals via crowdfunding it like this is

0:44:37.029,0:44:39.430

that we can talk about issues we’ve been

0:44:39.430,0:44:41.349

talking about investors and

0:44:41.349,0:44:42.940

broker-dealers restaurant investment

0:44:42.940,0:44:45.249

advisors and there’s in our society as

0:44:45.249,0:44:47.019

we all know there’s this thing called a

0:44:47.019,0:44:49.960

realtor in MLS right so it’s

0:44:49.960,0:44:51.789

crowdfunding is not really new in that

0:44:51.789,0:44:54.430

respect but in the context of

0:44:54.430,0:44:57.190

crowdfunding is there any provisions

0:44:57.190,0:44:59.680

regarding real estate agents and how

0:44:59.680,0:45:01.930

they get commissioned as relates to

0:45:01.930,0:45:06.640

securities break just took that question

0:45:06.640,0:45:08.019

and just made it even more complicated

0:45:08.019,0:45:15.489

and more complicated the so I’m just I’m

0:45:15.489,0:45:18.279

really going off the cuff here but real

0:45:18.279,0:45:19.660

estate agents to say there’s a deal

0:45:19.660,0:45:21.789

that’s being crowdfunded right and so

0:45:21.789,0:45:24.730

people are trying to raise money on the

0:45:24.730,0:45:28.720

sale of her to raise money to to buy a

0:45:28.720,0:45:32.470

project now on the sale the purchase or

0:45:32.470,0:45:34.210

sell the product a real estate and can

0:45:34.210,0:45:37.059

make commission on the purchase of sale

0:45:37.059,0:45:40.210

of securities real estate agent cannot

0:45:40.210,0:45:42.670

make commissions unless they’re also a

0:45:42.670,0:45:46.390

broker-dealer if the real estate agent

0:45:46.390,0:45:50.619

in the the project was in and there’s

0:45:50.619,0:45:53.769

actually interesting here in our home

0:45:53.769,0:45:55.500

state of Utah there’s

0:45:55.500,0:46:01.440

there is a billet will be introduced in

0:46:01.440,0:46:03.120

the next legislative session talking

0:46:03.120,0:46:04.950

about real estate crowdfunding and they

0:46:04.950,0:46:08.010

will allow it’s designed to allow

0:46:08.010,0:46:10.350

realtors to actually go out and raise

0:46:10.350,0:46:12.030

capital for real estate deals and very

0:46:12.030,0:46:13.860

excited state Commission’s I don’t know

0:46:13.860,0:46:16.830

we’ll see what is just another what’s

0:46:16.830,0:46:18.480

exciting for me because obviously it’s

0:46:18.480,0:46:24.570

just more added value to the industry

0:46:24.570,0:46:26.760

itself and more people will be joining

0:46:26.760,0:46:29.910

it is more the more volume of

0:46:29.910,0:46:32.040

crowdfunding the more legislation more

0:46:32.040,0:46:35.160

rule to be around it to to help everyone

0:46:35.160,0:46:38.850

um several people vast while we’ve been

0:46:38.850,0:46:43.380

talking about what’s the cost of a legal

0:46:43.380,0:46:44.910

review for my part I want to start

0:46:44.910,0:46:48.000

marketing portal was it cost to have a

0:46:48.000,0:46:49.230

legal review to make sure I’m doing it

0:46:49.230,0:46:52.560

right and that type of thing unites have

0:46:52.560,0:46:55.080

talked before on this you know your

0:46:55.080,0:46:58.200

typical cost of what you charge for you

0:46:58.200,0:46:58.890

to do

0:46:58.890,0:47:00.450

let’s just say let’s make it easy it’s a

0:47:00.450,0:47:02.220

crowd engine portal

0:47:02.220,0:47:03.900

how much would you charge to do a once

0:47:03.900,0:47:06.360

over wanted to say it’s the market a

0:47:06.360,0:47:08.760

seal of approval of a set of correctly

0:47:08.760,0:47:11.580

and by this configuration they’re

0:47:11.580,0:47:14.190

obeying all the guidelines of the

0:47:14.190,0:47:16.560

jurisdictions offering types they chose

0:47:16.560,0:47:19.680

yeah and i think i think this is you we

0:47:19.680,0:47:23.490

had this discussion before you know I

0:47:23.490,0:47:26.130

think in that scenario it’s not gonna be

0:47:26.130,0:47:28.560

alive and think you’re going to be final

0:47:28.560,0:47:30.240

five hundred to a thousand dollars to

0:47:30.240,0:47:32.970

just have somebody look over that and

0:47:32.970,0:47:36.330

and say this works I think the important

0:47:36.330,0:47:38.580

thing there is not just you’re looking

0:47:38.580,0:47:40.110

at the disclaimers you’re making sure

0:47:40.110,0:47:41.430

that that’s right but you’re also making

0:47:41.430,0:47:43.620

sure that if the functionalities were

0:47:43.620,0:47:49.140

that if it’s a a no listing for example

0:47:49.140,0:47:51.390

it’s just a listing platform i want to

0:47:51.390,0:47:53.130

make sure i want to look at how you’re

0:47:53.130,0:47:54.420

getting paid

0:47:54.420,0:47:56.340

I want to understand the business model

0:47:56.340,0:47:58.560

the business model so it’s it’s more

0:47:58.560,0:47:59.970

than just hailing click through a few

0:47:59.970,0:48:01.590

pages and yeah everything looks right

0:48:01.590,0:48:03.150

it’s really digging down and saying

0:48:03.150,0:48:04.620

what’s the business model how are you

0:48:04.620,0:48:05.880

getting paid

0:48:05.880,0:48:08.010

let me go through pretend like I’m an

0:48:08.010,0:48:09.210

investor so i can see

0:48:09.210,0:48:10.380

every step and make sure that i’m

0:48:10.380,0:48:11.880

getting the right disclosures getting

0:48:11.880,0:48:15.030

the right disclaimers that’s that’s what

0:48:15.030,0:48:18.090

a review would tell and insights kind

0:48:18.090,0:48:20.370

are you familiar with any case law

0:48:20.370,0:48:25.200

around crowdfunding and or any actions

0:48:25.200,0:48:27.540

sec your fingers take him with any

0:48:27.540,0:48:31.740

people you’ve come across or even heard

0:48:31.740,0:48:33.420

of in the industry i haven’t heard of

0:48:33.420,0:48:35.640

anything now so far you’ve seen there’s

0:48:35.640,0:48:37.530

been a few actions against people where

0:48:37.530,0:48:39.750

there’s been and that’s one of the

0:48:39.750,0:48:42.540

things that I like to talk about if I’m

0:48:42.540,0:48:45.750

speaking at a convention or or or on the

0:48:45.750,0:48:48.330

topic it one of the things you get is

0:48:48.330,0:48:52.170

from the skeptics and you saw is a lot

0:48:52.170,0:48:55.290

before the jobs act went into place was

0:48:55.290,0:48:56.580

well they’re just gonna be this huge

0:48:56.580,0:48:59.340

spike in fraud you’re not saying that at

0:48:59.340,0:48:59.670

all

0:48:59.670,0:49:02.310

using a few cases here that they’ve been

0:49:02.310,0:49:05.670

really well noted in the interesting

0:49:05.670,0:49:07.500

thing is those fraud cases were actually

0:49:07.500,0:49:09.570

snuffed out by the crowd people said I

0:49:09.570,0:49:10.650

don’t you know they start asking

0:49:10.650,0:49:12.480

questions

0:49:12.480,0:49:15.930

so you’re seeing a little any the the

0:49:15.930,0:49:18.030

ability for somebody to go and commit

0:49:18.030,0:49:20.400

fraud in these situations is i think is

0:49:20.400,0:49:23.340

actually dramatically decreased as

0:49:23.340,0:49:24.870

compared to some guy that’s going to try

0:49:24.870,0:49:26.790

to raise money from you know people

0:49:26.790,0:49:29.970

around his neighborhood church so too so

0:49:29.970,0:49:32.910

let’s change gears little are reggae

0:49:32.910,0:49:35.760

issuances considered private placements

0:49:35.760,0:49:38.340

or public offerings so this brings up a

0:49:38.340,0:49:41.820

big question of what when

0:49:41.820,0:49:43.290

what is something of a private placement

0:49:43.290,0:49:45.180

when can I go public with it can I go

0:49:45.180,0:49:48.000

public on a reg D kind of public already

0:49:48.000,0:49:50.670

a plus can with what what’s the line

0:49:50.670,0:49:52.530

between private placement and the public

0:49:52.530,0:49:55.200

offering and which offered types qualify

0:49:55.200,0:49:56.640

for those this goes back to the question

0:49:56.640,0:49:59.190

to something we talked about before

0:49:59.190,0:50:00.720

where I was saying the difference

0:50:00.720,0:50:05.340

between you know a a 50 60 or title to

0:50:05.340,0:50:08.700

or were for a6 title three

0:50:08.700,0:50:10.170

those are exemptions from registration

0:50:10.170,0:50:16.590

so you’re not registering anything a no

0:50:16.590,0:50:20.010

title for reggae plus is a it is a

0:50:20.010,0:50:20.930

registered

0:50:20.930,0:50:22.730

offering so it’s like a mini public

0:50:22.730,0:50:25.130

offering and if you go through that

0:50:25.130,0:50:27.589

process one of the big differences is

0:50:27.589,0:50:29.930

compared to the other two is you buy you

0:50:29.930,0:50:33.619

buy stock in or securities that are sold

0:50:33.619,0:50:35.930

under reggae plus they are unrestricted

0:50:35.930,0:50:38.480

securities meaning you can go and and

0:50:38.480,0:50:44.210

resell those securities without having

0:50:44.210,0:50:48.920

to wear as compared to securities under

0:50:48.920,0:50:50.809

the thief by under the other exhibit the

0:50:50.809,0:50:52.880

exemptions from registration those are

0:50:52.880,0:50:56.000

restricted securities so going to to the

0:50:56.000,0:50:58.579

question of being a public company after

0:50:58.579,0:51:02.089

you go through the process array plus

0:51:02.089,0:51:05.119

you have unrestricted securities at that

0:51:05.119,0:51:07.790

point you can go and try to list those

0:51:07.790,0:51:11.750

securities on a new marketplace such as

0:51:11.750,0:51:14.690

the OTC and that’s something that you a

0:51:14.690,0:51:16.940

lot of people are talking about doing an

0:51:16.940,0:51:20.270

inner are trying to do the only one did

0:51:20.270,0:51:22.520

I think successfully done that has been

0:51:22.520,0:51:25.069

Elio motors through there a plus

0:51:25.069,0:51:27.859

offering and they were able to list that

0:51:27.859,0:51:29.869

on the OTC and allow those shares to be

0:51:29.869,0:51:32.510

traded and and have a public mind is

0:51:32.510,0:51:35.180

there anything you have to do to allow

0:51:35.180,0:51:37.099

that to happen other than the the filing

0:51:37.099,0:51:41.390

i know that for example nasdaq charges

0:51:41.390,0:51:43.819

two million dollars and i think twenty

0:51:43.819,0:51:45.470

thousand dollars a year to be listed on

0:51:45.470,0:51:49.549

the that perform in the OTC i believe

0:51:49.549,0:51:54.380

it’s $20,000 American so you have two

0:51:54.380,0:51:56.359

microns go through listing and in you

0:51:56.359,0:51:58.549

know in in order to qualify for Nasdaq

0:51:58.549,0:52:01.849

or or another you know stock exchange

0:52:01.849,0:52:04.280

their qualifications on the size of the

0:52:04.280,0:52:07.849

company according and then again once

0:52:07.849,0:52:09.500

you do that yeah then you become subject

0:52:09.500,0:52:13.819

to to you know their requirements but

0:52:13.819,0:52:17.119

also for the sec report reporting

0:52:17.119,0:52:20.299

requirements under a plus if you filed

0:52:20.299,0:52:23.510

rate plus you have ongoing reporting

0:52:23.510,0:52:26.660

requirements with the SEC but they’re

0:52:26.660,0:52:29.690

not 34 Act reporting requirements you

0:52:29.690,0:52:32.329

don’t have to do quite as much as you

0:52:32.329,0:52:33.800

would if you were fully report

0:52:33.800,0:52:36.350

public company you still have to file

0:52:36.350,0:52:38.660

these the you still have to find regular

0:52:38.660,0:52:40.400

reports but as a reporting company you

0:52:40.400,0:52:41.960

had five quarterly reports annual

0:52:41.960,0:52:45.770

reports current reports and with the SE

0:52:45.770,0:52:47.840

with it coming

0:52:47.840,0:52:51.380

it goes that doesn’t an offering through

0:52:51.380,0:52:54.410

regular plus the requirements are are

0:52:54.410,0:52:59.060

less very we have a question what would

0:52:59.060,0:53:01.760

you say is a reasonable cost to set up

0:53:01.760,0:53:04.730

at eight SPV our regular plus real

0:53:04.730,0:53:06.950

estate offering i’ll answer this one

0:53:06.950,0:53:09.320

because I don’t think marty touches this

0:53:09.320,0:53:11.660

a lot is actually a crowded my car

0:53:11.660,0:53:14.630

engine offering we offer the ability for

0:53:14.630,0:53:17.210

to set up an entity and then all also

0:53:17.210,0:53:19.310

manage that entity so if you’d like

0:53:19.310,0:53:21.410

price on that your look basically

0:53:21.410,0:53:23.960

looking at four thousand dollars a year

0:53:23.960,0:53:25.640

but you can call me i could give you

0:53:25.640,0:53:28.130

more details on that so yes we have

0:53:28.130,0:53:30.350

identity management pre and post rays i

0:53:30.350,0:53:32.570

would do all your k ones reporting etc

0:53:32.570,0:53:36.800

and then and then from my perspective

0:53:36.800,0:53:38.930

obviously it’s just going to depend but

0:53:38.930,0:53:40.910

i don’t know if you got if the question

0:53:40.910,0:53:43.730

is also what does it cost to a reggae

0:53:43.730,0:53:48.260

plus offering you know i think you’re

0:53:48.260,0:53:52.820

going to be 30,000 to on the low end of

0:53:52.820,0:53:55.070

50,000 you know from is what I’m

0:53:55.070,0:53:57.140

generally seeing and then he go to a

0:53:57.140,0:54:00.170

large you know coastal New York fermer

0:54:00.170,0:54:02.330

la ferme you’re probably double that

0:54:02.330,0:54:05.240

yeah it’s very very regional regional

0:54:05.240,0:54:06.500

sometimes what you pay

0:54:06.500,0:54:10.040

yeah um we touched on this in the

0:54:10.040,0:54:13.010

beginning of the the webinar let’s touch

0:54:13.010,0:54:14.870

on it again does a person need to be

0:54:14.870,0:54:17.030

licensed broker dealer in order to

0:54:17.030,0:54:20.750

register a platform with FINRA so i’m

0:54:20.750,0:54:22.790

assuming entitle three

0:54:22.790,0:54:25.580

yeah so if it’s a title three then the

0:54:25.580,0:54:27.320

know you don’t you that you can go

0:54:27.320,0:54:31.400

through the process of becoming it what

0:54:31.400,0:54:33.200

we talked about a funding portal or

0:54:33.200,0:54:36.410

licensed intermediary which is like a BD

0:54:36.410,0:54:40.070

light and it allows you to to sell

0:54:40.070,0:54:41.990

securities receive commissions but again

0:54:41.990,0:54:43.370

the only types of securities you can

0:54:43.370,0:54:44.430

sell

0:54:44.430,0:54:47.910

our securities offered under $MONEY for

0:54:47.910,0:54:51.000

a six or regulation crowdfunding if you

0:54:51.000,0:54:53.010

want to be a platform that sells

0:54:53.010,0:54:59.790

securities under reggae + $OPERAND or 50

0:54:59.790,0:55:04.020

60 or any other exemption and take

0:55:04.020,0:55:05.340

commissions on it then yes you would

0:55:05.340,0:55:07.020

need to be registered as a broker-dealer

0:55:07.020,0:55:09.570

so let’s do one more curve ball before

0:55:09.570,0:55:13.470

we close it in a few minutes we’re the

0:55:13.470,0:55:16.800

person writes can you comment on raising

0:55:16.800,0:55:19.560

capital that our equity with foreign and

0:55:19.560,0:55:22.080

domestic investors with foreign projects

0:55:22.080,0:55:24.630

Commission’s vs listing fees does it

0:55:24.630,0:55:27.030

need to be a US company so there’s

0:55:27.030,0:55:30.570

obviously do i if i have a u.s. portal

0:55:30.570,0:55:32.940

because i had here

0:55:32.940,0:55:37.020

can I raise capital for if with foreign

0:55:37.020,0:55:41.040

investors and then do i have to have a

0:55:41.040,0:55:42.750

ussd or could be a foreign entity

0:55:42.750,0:55:44.700

Antichrist still have those

0:55:44.700,0:55:46.860

relationships between foreign investors

0:55:46.860,0:55:49.170

and domestic and foreign entities work

0:55:49.170,0:55:55.170

so i’m alright so say it’s it and

0:55:55.170,0:55:56.610

hopefully this answers your question so

0:55:56.610,0:55:59.970

say it’s a us we’re just gonna talk

0:55:59.970,0:56:04.020

we’ll talk about us issuer they could

0:56:04.020,0:56:07.290

raise money from both domestic and

0:56:07.290,0:56:10.410

foreign investors for investors are

0:56:10.410,0:56:13.260

coming under separate exemption called

0:56:13.260,0:56:17.340

regulation ass they receive you know

0:56:17.340,0:56:20.460

they can subscribe and and participate

0:56:20.460,0:56:24.000

in an offering here at the u.s. if it’s

0:56:24.000,0:56:26.910

a u.s. issuer but there’s a demand

0:56:26.910,0:56:28.950

lysates a foreign project say it’s a

0:56:28.950,0:56:31.050

u.s. is your Delaware company but they

0:56:31.050,0:56:34.020

own you know project into x or something

0:56:34.020,0:56:37.410

if that’s even allowed under through the

0:56:37.410,0:56:40.170

local rules there then you know again

0:56:40.170,0:56:42.720

that’s all possible US investors for

0:56:42.720,0:56:47.610

investors could invest in that SPV if it

0:56:47.610,0:56:53.280

is a foreign issuer then the u.s. rules

0:56:53.280,0:56:55.560

are not going to apply you’re going to

0:56:55.560,0:56:59.250

have to comply with the you know if it’s

0:56:59.250,0:56:59.850

set

0:56:59.850,0:57:05.670

I you know german or you know any

0:57:05.670,0:57:08.670

European entity that’s that’s raising

0:57:08.670,0:57:10.320

capital your have to comply with the

0:57:10.320,0:57:15.630

securities laws of that jurisdiction and

0:57:15.630,0:57:18.390

answer a question or let’s say yes

0:57:18.390,0:57:23.640

Oh last question in the inner process to

0:57:23.640,0:57:25.800

register your portal

0:57:25.800,0:57:31.470

I think there’s a requirement that is

0:57:31.470,0:57:33.120

there any limit to dollars amount of

0:57:33.120,0:57:34.470

company must have in order to be

0:57:34.470,0:57:37.980

approved 2015 know that these are twenty

0:57:37.980,0:57:39.570

thousand eleven hundred thousand Harvard

0:57:39.570,0:57:43.050

is there a amount of money the portal

0:57:43.050,0:57:44.520

hot must have in order to be approved

0:57:44.520,0:57:48.210

for Federer and so I can net worth

0:57:48.210,0:57:53.070

requirement me as is their net worth

0:57:53.070,0:57:56.340

limit or quote around to qualify for

0:57:56.340,0:57:58.980

funding portal now so i could have zero

0:57:58.980,0:58:00.360

dollars in the bank and I could

0:58:00.360,0:58:03.090

technically qualify for federal ya know

0:58:03.090,0:58:04.890

zero dollars in the paint you still are

0:58:04.890,0:58:07.950

gonna have to pay to get the process you

0:58:07.950,0:58:09.300

know you still have just been everything

0:58:09.300,0:58:11.280

else but there’s not a way with that

0:58:11.280,0:58:12.750

looks like a piggy bank account before

0:58:12.750,0:58:14.850

we go in there yeah there’s filing fees

0:58:14.850,0:58:17.310

and obviously legal fees associated with

0:58:17.310,0:58:22.560

that so you starting a funding portal or

0:58:22.560,0:58:24.210

light you know funding portal on a

0:58:24.210,0:58:26.880

shoestring is not realistic all this

0:58:26.880,0:58:30.600

say that again the process to take it

0:58:30.600,0:58:34.140

through the sec and finra is its long

0:58:34.140,0:58:36.780

and I was right along

0:58:36.780,0:58:39.780

give me give me a range 36 months I’d

0:58:39.780,0:58:41.460

say six months to take it through

0:58:41.460,0:58:46.050

there’s numerous applications there’s a

0:58:46.050,0:58:48.000

lot of documentation that needs to be

0:58:48.000,0:58:50.580

generated policies and procedures and

0:58:50.580,0:58:52.470

disclosure materials and so forth so

0:58:52.470,0:58:56.250

it’s it’s definitely there there

0:58:56.250,0:58:58.290

definitely is a barrier stand true that

0:58:58.290,0:58:59.820

how much of that time limit is

0:58:59.820,0:59:02.310

controlled by the applicant how much of

0:59:02.310,0:59:04.500

that time was controlled by the SEC and

0:59:04.500,0:59:06.630

friendly so if i have a lot of resources

0:59:06.630,0:59:08.590

and a lot of motivation

0:59:08.590,0:59:09.910

and i just want to pull those my way

0:59:09.910,0:59:12.280

through the approval process what would

0:59:12.280,0:59:15.070

be the quickest you think i could get it

0:59:15.070,0:59:16.060

done

0:59:16.060,0:59:17.770

I would still say four to six months

0:59:17.770,0:59:19.720

because a lot of it is it’s going to be

0:59:19.720,0:59:21.970

going to finger i think the you know

0:59:21.970,0:59:23.740

dealing with your attorney going through

0:59:23.740,0:59:26.350

the process the application that’s going

0:59:26.350,0:59:30.790

to be a month two months and then the

0:59:30.790,0:59:32.710

rest the time you’re dealing with dinner

0:59:32.710,0:59:36.070

on there’s interviews there’s there’s of

0:59:36.070,0:59:37.900

theirs back and forth

0:59:37.900,0:59:39.010

they’re going to want to be able to go

0:59:39.010,0:59:40.660

through your platform review everything

0:59:40.660,0:59:46.540

so that’s definitely process . so thank

0:59:46.540,0:59:48.280

you everyone for participating online

0:59:48.280,0:59:50.740

while we martin had Marty and I have had

0:59:50.740,0:59:53.950

a opportunity shot will be at this again

0:59:53.950,0:59:57.910

next month the third thursday and we

0:59:57.910,1:00:01.060

look for date or anything here again

1:00:01.060,1:00:02.890

thank you so much have a good day

1:00:02.890,1:00:09.000

Thank You Marty thank you