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

 

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

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

Filing fee – Fixed

New notice – $500

Late fee for late filings – None

 

What are Nevada’s Blue Sky Laws?

NV ST 90.460 Registration requirement

NV ST 90.465 Expeditious processing of notice of claim of exemption from registration requirement

NV ST 90.520 Exempt securities; filing and fee required for exemption

NV ST 90.540 Additional exemptions; fee

NV ST 90.550 Revocation of exemptions

NV ST 90.610 Unlawful representation concerning licensing, registration or exemption

NV ST 90.690 Burden of proof

 

What are Nevada’s securities laws exemptions?

Governmental entities; certain foreign governments including Canada; Financial institutions: depository institutions; Non-profit membership cooperatives; Open-end management investment company or unit investment trust; Other entities: railroads, common carriers, public utilities, holding companies and insurance companies; Equipment trust certificates; Listed stock exchange securities and clearing agency options etc.; Non-profit persons; Commercial paper obligations; Employee benefit plan

 

What are Nevada’s procedures for securities law exemptions? 

Applicable to: non-profit persons; Procedure includes: filing notice of terms, copies of sales materials, and 5 day review period; Applicable to: open-end management investment company or unit investment trust; Procedure includes: filing notice of intent to sell and $300 or $500 fees; Applicable to: depository institutions, railroads, common carriers, public utilities, holding companies, equipment trust certificates, clearing agency options etc., and commercial paper obligations; Procedure includes: notice of exemption claim and $300 fee; More expedient processing of exemption claims is available for an extra fee

 

Frequently Asked Questions

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

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

 

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

They can look, but they can’t give you advice as it pertains to Nevada. 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 North Las Vegas, Nevada, 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.