Syndicators looking to raise capital from investors in Montana should be aware of Montana’s Blue Sky Laws. These laws regulate the securities industry within the state and understanding the basics of Montana’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.

 

What are Blue Sky Laws in General? 

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 Montana’s Blue Sky Rules apply. 

 

What if I Need to Notify Montana about my Regulation D Syndication?

Here are the basic facts you need to know about giving notice to Montana about your Reg D Rule 506b or 506c offer:

Filing fee – Fixed and Variable

New notice – Fixed: $200 Variable: .1% $100,000 max combined $1.000

Late fee for late filings – None

 

What are Montana’s Blue Sky Laws?

MT ST 30-10-104 Exempt securities

MT ST 30-10-106 Proof of exemption

MT ST 30-10-202 Registration of securities

MT ST 30-10-303 Unlawful representation concerning registration or exemption

 

What are Montana’s securities laws exemptions?

Governmental entities; certain foreign governments including Canada; Financial institutions: banks, savings institutions, trust companies, savings and loan, building and loan, credit unions, industrial loan associations etc.; Other entities: railroads, common carriers, public utilities, holding companies and insurers; Listed stock exchange securities etc.; Non-profit persons; Current transaction commercial paper; Employee benefit plan; Out-of-state securities; Securities meeting certain conditions

 

Frequently Asked Questions

Do I need an attorney from Montana then to put together an offering?

That depends. If the offering you are putting together is under Regulation D and not one of the Montana 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 Billings, Montana, that was going to be offered in different states, and you didn’t need counsel on questions related to Montana 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 Montana 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 Missoula, Montana, all of the investors were from Montana, and you wanted to use one of Montana’s Blue Sky Laws above as an exception to registration, then you would need to work with someone licensed in Montana.

 

Is it ok if the real estate syndication attorney, licensed outside of Montana, looks over my purchase contract?

They can look, but they can’t give you advice as it pertains to Montana. 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 Great Falls, Montana, 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.