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Fast Facts on the Top 10 Relevant Regulatory Areas for Real Estate Fund Managers | Allen Matkins

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1. SECURITIES ACT OF 1933

In order to bring investors into a fund, managers must offer and sell securities of the fund to them. Securities that are offered and sold to investors need to be sold under a registration statement or applicable exemption from registration. A private placement under Rule 506(b) or 506(c) is the most common exemption used by real estate fund sponsors and it permits the sale of securities to an unlimited number of “accredited investors.”

2. INVESTMENT ADVISERS ACT OF 1940

The fund manager must register as an investment adviser if, for compensation, the manager advises on the purchase and sale of “securities.” The aggregate amount of “securities” must exceed a threshold of $100 million assets under management (or $150 million assets under management for private funds) in order to register federally. The fundamental question is whether the real estate fund manager is providing advice regarding “securities”…

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