posted 12-11-2004 01:13 AM                    

Here is our situation...my dad, my brother-in-law, and I want to start a small private investment partnership. I would be the general partner and primary decision maker. None of us are "accredited" investors but certainly meet the criteria of being "capable of evaluating the merits and risks". In addition, we're only talking about a total of $200,000 combined.

As I understand Regulation D, we can form a partnership under Rule 506 without registering with the SEC regardless of the amount as long as we are under 35 investors. Is this correct?

If this is correct, would we still have to file a 'Form D'? I don't see a provision on it for filing under rule 506. (I see mentions of 504 and 505 but not 506.)

(P.S. Don't worry...I will be meeting with a local attorney before we go ahead with this - I just want to make sure I have all my "ducks in-a-row" before contacting them)

posted 12-11-2004 08:10 AM                     

The Form D filing requirement is in Rule 503(a). Failure to file a Form D means that you do not qualify for the Regulation D safe harbor, but does not necessarily mean that you have a failed private placement. (If it's only the three of you, you almost certainly do have a valid private placement, if indeed compliance with the Securities Act of 1933 is required at all.) However, complying with Regulation D may simplify your compliance with applicable state securities law requirements.

posted 12-12-2004 11:37 AM                    

There are a couple of family friends that have expressed an interest in participating but I'm leary about their participation due to my lack of full understanding of SEC laws at this time...but it is an option I would like to keep open in the future.

Since posting the initial message, I did some further research and, yes, I agree that complying with regulation D is the best course of action.

Is anybody familiar with Michigan state law with regards to the need to register as an investment adviser? While trying to research Michigan's law I saw a clause saying investment advisors cannot be compensated based on capital gains, which would contradict the manner in which we will run the partnership - so, needless to say, I'm a little perplexed. I will be contacting attorneys tomorrow but if anybody can offer insight it would be GREATLY appreciated.