SEC and State Compliance Part 5: Understanding Commingling for Syndication Sponsors

Syndication Law & The Private Placement Memorandum Attorney

When working on ensuring your Regulation D offering is compliant with the SEC and state regulators, you're likely to encounter the concept of 'commingling'. As the name suggests, commingling refers to the act of mixing funds from different sources, something that's frowned upon by regulators such as the SEC and state regulators. Specifically, they're against the idea of using funds from one investment pool to fund another, even temporarily. Sure, it might seem like an easy solution when you're short on cash for a new investment opportunity, but it's a practice that can land you in hot water. At its core, it's about respecting the rights of your investors. After all, they've entrusted you with their hard-earned cash, expecting it to be used in a certain way. Any deviation from this is a breach of trust, and could lead to severe enforcement actions from regulators. So, it's essential to treat each fund as a separate entity, with its own set of assets and investors.

Read more about PPMs - What is the purpose of Private Placement Memorandum (PPM)?: https://www.moschettilaw.com/do-i-need-a-ppm/

Read more about the SEC and Reg D - The SEC And It’s Reg D: https://www.moschettilaw.com/sec-reg-d/

Moschetti Syndication Law Group is a boutique syndication law firm, serving small and growth-bound syndicators, as well as private equity firms. Our attorney, Tilden Moschetti, is determined to keep the firm’s ‘boutique’ size so we can tailor the services to each client’s unique needs without turning the firm into a faceless factory churning out private placement memorandums or passing unnecessary overhead expenses onto our clients. (As our client, you’ll only pay a fixed fee, so no surprises.) As for the client experience, we give real-time answers with Tilden Moschetti without making you book an official appointment or get passed along to associates or paralegals. We’ll work with your ambitions and overall vision to help you close the current deal and fill in that ‘missing’ piece – whatever you need – to keep adding more syndications to your portfolio. We keep syndicators syndicating (TM).

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