By: Tilden Moschetti, Esq.
Syndicators looking to raise capital from investors in Missouri should be aware of the Missouri’s Blue Sky Laws. These laws regulate the securities industry within the state and understanding the basics of Missouri‘s blue sky laws will help you make smart business decisions about how you put together an offer and protect yourself from potential legal trouble.
The purpose of securities laws is to protect investors. There are two levels of regulatory agencies that provide that protection: the Securities and Exchange Commission (the SEC) and each state’s security regulation agency.
Federal law has severely restricted the states’ abilities to review or restrict sales of most securities when offered through a Federal regulation (such as syndication of a Reg D offering). The states do, however, often require a notice be filed with them along with the appropriate fee, conduct investigations, and bring fraud actions if necessary in order to protect those domiciled in their states.
When everything takes place within the state, then Missouri’s Blue Sky Rules apply.
Here are the basic facts you need to know about giving notice to Missouri about your Reg D Rule 506b or 506c offer:
Filing fee – Fixed
New notice – $100
Late fee for late filings – $50 >15 days after date of first sale.
MO ST 409.2-201 Exempt securities
MO ST 409.2-203 Additional exemptions and waivers
MO ST 409.2-204 Denial, suspension, revocation, condition, or limitation of exemptions
MO ST 409.3-301 Securities registration requirement
MO ST 409.5-503 Evidentiary Burden
MO ST 409.5-506 Misrepresentations concerning registration or exemption
MO ST 409.5-508 Criminal Penalties
MO ST 409.5-509 Civil Liability
MO ST 409.6-608 Uniformity and cooperation with other agencies
Governmental entities; certain foreign governmental entities; Financial institutions: depository and banking institutions, and trust companies; Non-profit membership cooperatives; Other entities: railroads, common carriers, public utilities, public utility holding companies and insurance companies; Equipment trust certificates; Listed security market securities and clearing agency options etc.; Non-profit persons etc.
Applicable to: non-profit persons etc.; Procedure could include: filing notice of terms, copies of sales materials, and review period; Filing exemption request; or Registration
That depends. If the offering you are putting together is under Regulation D and not one of the Missouri specific Blue Sky Laws (as discussed above), then probably not.
For example, if you needed a real estate syndication attorney to put together a private placement memorandum for a multifamily deal in Kansas City, Missouri, that was going to be offered in different states, and you didn’t need counsel on questions related to Missouri laws, then chances are a licensed syndication lawyer would be able to help. They could even put together the entity for you and write the operating agreement, they just couldn’t provide you counsel on the specific laws of Missouri and how they may or may not pertain to your offer.
However, if you were putting together a private placement memorandum for a development project in St Louis, Missouri, all of the investors were from Missouri, and you wanted to use one of Missouri’s Blue Sky Laws above as an exception to registration, then you would need to work with someone licensed in Missouri.
They can look, but they can’t give you advice as it pertains to Missouri. For example, Tilden Moschetti, Esq, syndication attorney for the Moschetti Syndication Law Group, will look, if asked, about the contract underlying your purchase contract in Springfield, Missouri, but makes it clear that he can give business consulting advice (discussion on price and broad deal points like the length of time until closing), but cannot speak to any specific term as he is not licensed there.
Contact our syndication and private placement memorandum law firm today!