b'the manager(s) to generate a profit on their behalf, thus meeting the fourth prong of the Howey Test. What is a Securities Offering? Real estate syndication and funds are regulated by the federal Securities and Exchange Commission (SEC) or state securities agencies (sometimes both), as both usually involves the sale of securities in the form of either promissory notes or investment contracts.When you are selling passive interests in your company, you are selling investmentcontracts.Whenyouarerepeatedlyborrowingmoneyfrom privateinvestors(family,friendsandacquaintances),youareselling securities in the form of promissory notes.A securities offering must be registered (approved by the regulatory agencies) unless exempt, which generally requires following a strict set of rules and filing of exemption notices with applicable securities agencies. Theprocessofofferingsecuritiestoinvestorsiscalledasecurities offering or private placement offering.The documents the asset manager will share with prospective investors to tell them about the investment opportunity are called securities offering documents or offering materials.Manypeoplewhoareraisingmoneyfromprivateinvestorsfailto recognize: a) that they are offering or selling securities; or b) that they must followsecuritieslawstolegallydoso.Andsomehaveconvinced themselves,usuallybecausetheydontfullyunderstandtherules,that securities laws dont apply to them; we call them in denial.7'