Syndicators looking to raise capital from investors in New Mexico should be aware of the New Mexico’s Blue Sky Laws. These laws regulate the securities industry within the state and understanding the basics of New Mexico’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 New Mexico’s Blue Sky Rules apply.
What if I Need to Notify New Mexico about my Regulation D Syndication?
Filing fee – Fixed
New notice – $350
Late fee for late filings – $700 16‐25 days; $1,050 >25 days
What are New Mexico’s Blue Sky Laws?
NM ST 58-10-89 Exemption from securities laws
NM ST § 58-13C-201 Exempt securities
NM ST § 58-13C-203 Additional exemptions and waivers
NM ST § 58-13C-204 Denial, suspension, revocation, condition or limitation of exemptions
What are New Mexico’s securities laws exemptions?
Associations, their officers, employees and agents, savings accounts and the sale, issuance, transfer and offering of savings accounts of any association or federal association are exempt from laws of this state which provide for supervision, registration or regulation in connection with the sale, issuance, transfer or offering of securities, insofar as such savings accounts are concerned.
Governmental entities; certain foreign governments including Canada; Financial institutions: banks, savings institutions, trust companies, savings and loan, building and loan, small loan corporations, credit unions, industrial loan associations etc.; Cooperative corporations; Other entities: railroads, common carriers, public utilities, holding companies, and insurance companies; Listed stock exchange securities; Non-profit persons; Current transaction commercial paper; Employee benefit plan
rule adopted or order issued pursuant to the New Mexico Uniform Securities Act may exempt a security, transaction or offer; a rule pursuant to the New Mexico Uniform Securities Act may exempt a class of securities, transactions or offers from any or all of the requirements of Sections 301 through 306 and 504 of that act; and an order pursuant to the New Mexico Uniform Securities Act may waive, in whole or in part, any or all of the conditions for an exemption or offer pursuant to Sections 201 and 202 of that act.
Frequently Asked Questions
Do I need an attorney from New Mexico then to put together an offering?
That depends. If the offering you are putting together is under Regulation D and not one of the New Mexico-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 Albuquerque, New Mexico, that was going to be offered in different states, and you didn’t need counsel on questions related to New Mexico 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 New Mexico 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 Las Cruces, New Mexico, all of the investors were from New Mexico, and you wanted to use one of New Mexico’s Blue Sky Laws above as an exception to registration, then you would need to work with someone licensed in New Mexico.
Is it ok if the real estate syndication attorney, licensed outside of New Mexico, looks over my purchase contract?
They can look, but they can’t give you advice as it pertains to New Mexico. 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 Rio Rancho, New Mexico, 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.
Tilden Moschetti, Esq., is a highly sought-after syndication attorney with nearly two decades of experience. His clientele ranges from real estate developers and startups to established businesses and private equity funds. Tilden’s expertise in syndication law comes not only from his knowledge of syndication and securities law but from real, hands-on experience as an active syndicator himself in every real estate product type and nearly all markets in the US. His knowledge and experience set him apart and established him as the Reg D legal services leader.