As Seen In

Wyoming Blue Sky Laws for Syndication

By: Tilden Moschetti, Esq.

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

 

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

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

Filing fee – Fixed

New notice – $200

Late fee for late filings – None

 

What are Wyoming’s Blue Sky Laws?

WY ST § 17-4-201 Exempt securities

WY ST § 17-4-203 Intrastate crowdfunding exemption

WY ST § 17-4-204 Additional exemptions and waivers

WY ST § 17-4-205 Denial, suspension, revocation, condition, or limitation of exemptions

WY ST § 17-4-301 Securities registration requirement

WY ST § 17-11-118 Exemption from securities registration

 

What are Wyoming’s securities laws exemptions?

The following securities are exempt: 

(i) A security, including a revenue obligation or a separate security adopted under the Securities Act of 1933, issued, insured, or guaranteed by the United States; by a state; by a political subdivision of a state; by a public authority, agency, or instrumentality of one (1) or more states; by a political subdivision of one (1) or more states; or by a person controlled or supervised by and acting as an instrumentality of the United States under authority granted by the congress; or a certificate of deposit for any of the foregoing; 

(ii) A security issued, insured or guaranteed by a foreign government with which the United States maintains diplomatic relations, or any of its political subdivisions, if the security is recognized as a valid obligation by the issuer, insurer, or guarantor; 

(iii) A security issued by and representing or that will represent an interest in or a direct obligation of, or be guaranteed by: 

(A) An international banking institution; 

(B) A banking institution organized under the laws of the United States; a member bank of the federal reserve system; or a depository institution a substantial portion of the business of which consists or will consist of receiving deposits or share accounts that are insured to the maximum amount authorized by statute by the federal deposit insurance corporation, the national credit union share insurance fund, or a successor authorized by federal law or exercising fiduciary powers that are similar to those permitted for national banks under the authority of the comptroller of currency; or

(C) Any other depository institution, unless by rule or order the secretary of state. 

(iv) A security issued by and representing an interest in, or a debt of, or insured or guaranteed by, an insurance company authorized to do business in this state; 

(v) A security issued or guaranteed by a railroad, other common carrier, public utility, or public utility holding company that is: 

(A) Regulated in respect to its rates and charges by the United States or a state; 

(B) Regulated in respect to the issuance or guarantee of the security by the United States, a state, Canada, or a Canadian province or territory; or 

(C) A public utility holding company registered under the Public Utility Holding Company Act of 1935 or a subsidiary of such a registered holding company within the meaning of that act.

(vi) A federal covered security specified in section 18(b)(1) of the Securities Act of 1933 or by rule adopted under that provision or a security listed or approved for listing on another securities market specified by rule under this act; a put or a call option contract; a warrant; a subscription right on or with respect to such securities; or an option or similar derivative security on a security or an index of securities or foreign currencies issued by a clearing agency registered under the Securities Exchange Act of 1934 and listed or designated for trading on a national securities exchange, a facility of a national securities exchange, or a facility of a national securities association registered under the Securities Exchange Act of 1934 or an offer or sale, of the underlying security in connection with the offer, sale, or exercise of an option or other security that was exempt when the option or other security was written or issued; or an option or a derivative security designated by the securities and exchange commission under section 9(b) of the Securities Exchange Act of 1934;

(vii) A security issued by a person organized and operated exclusively for religious, educational, benevolent, fraternal, charitable, social, athletic, or reformatory purposes, or as a chamber of commerce, and not for pecuniary profit, no part of the net earnings of which inures to the benefit of a private stockholder or other person, or a security of a company that is excluded from the definition of an investment company under section 3(c)(10)(B) of the Investment Company Act of 1940 except that with respect to the offer or sale of a note, bond, debenture, or other evidence of indebtedness issued by such a person, a rule may be adopted under this act limiting the availability of this exemption by classifying securities, persons, and transactions, imposing different requirements for different classes, specifying with respect to subparagraph (B) of this paragraph the scope of the exemption and the grounds for denial or suspension, and requiring an issuer: 

(A) To file a notice specifying the material terms of the proposed offer or sale and copies of any proposed sales and advertising literature to be used and provide that the exemption becomes effective if the secretary of state does not disallow the exemption within the period established by the rule;

(B) To file a request for exemption authorization for which a rule under this act may specify the scope of the exemption, the requirement of an offering statement, the filing of sales and advertising literature, the filing of consent to service of process complying with W.S. 17-4-611, and grounds for denial or suspension of the exemption; or 

(C) To register under W.S. 17-4-304. 

(viii) A member’s or owner’s interest in, or a retention certificate or like security given in lieu of a cash patronage dividend issued by, a cooperative organized and operated as a nonprofit membership cooperative under the cooperative laws of a state, but not a member’s or owner’s interest, retention certificate, or like security sold to persons other than bona fide members of the cooperative; and

(ix) An equipment trust certificate with respect to equipment leased or conditionally sold to a person, if any security issued by the person would be exempt under this section or would be a federal covered security under section 18(b)(1) of the Securities Act of 1933.

 

Frequently Asked Questions

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

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

 

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

They can look, but they can’t give you advice as it pertains to Wyoming. 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 Gillette, Wyoming, 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.

Make informed decisions about your syndication.

Contact our syndication and private placement memorandum law firm today!