Staying compliant with securities regulations and requirements it critical for the success of a fund or syndication. Both state and federal law require managers to file certain securities filings. Failure to file these state and federal filings can result in loss of an offering’s securities exemption. Below is a breakdown of the filings typically required.

Federal Securities Filings – Form D

Form D is the federal securities filing required to be filed with the SEC. The filing provides certain information about the offering and securities sold. Form D must be filed within 15 days of a “sale” of a security which is typically when the first investor subscribes.

Failure to file Form D may result in loss of the exemption relied on in the offering documents which results in an unlicensed sale of securities leading to serious consequences. Such consequences could include criminal or civil penalties, fines, forced recission, or the inability to raise capital.

To file Form D, fund or syndication managers must follow the following steps:

Register with the SEC’s EDGAR Filer Management website by completing application for Form ID.
Prepare the Form D.
Login to EDGAR and file the Form D.

There is no fee to file a Form D.

State Securities Filings – Blue Sky Laws

Regulation D of the Securities Act provides a federal exemption from the registration of securities for certain private funds. However, state securities law still has compliance requirements that must be followed. Blue Sky laws are state securities laws that are intended to protect investors from fraud. While blue sky laws vary between states, they usually involve a notice filing (similar to the Form D) with details on the securities being offered, the terms of the offering, and any additional state-specific information.

Failure to file blue sky filings can result in serious consequences such as fines, criminal charges, and the inability to raise capital in a particular state.

To file a blue sky filing, fund or syndication managers must follow the following steps (subject to any modifications from a specific state):

Register with the state’s regulatory agency.
Prepare disclosure documents with the information required in the notice filing. Usually, this is a copy of the Form D.
Submit the filing by the filing deadline. Usually, the filing deadline is 15 days from the first sale in that state.
Pay the required filing fee. Note that the more investors you have in different states, the more expensive your compliance costs are. Blue sky filings range from $0 to $1,200.
In some cases, states may ask additional follow-up questions or documents that will need to be submitted.

Navigating the complex regulatory landscape of securities filings is a critical aspect of managing private funds and syndications. By prioritizing regulatory compliance and staying ahead of filing requirements, fund, and syndication managers can focus on their primary goal of delivering returns for their investors while mitigating legal and regulatory risks.