Avoiding the 1940 Act: Why Exemption is the Only Path
from Syndication Attorney Field Notes with Tilden Moschetti Hosted by Tilden Moschetti
Many sponsors assume that locking in a Regulation D exemption means their securities work is complete. But raising the money is only the first hurdle. The second is the Investment Company Act of 1940, which governs what your entity actually does with pooled capital. In this episode of Syndication Attorney Field Notes, Tilden Moschetti explains the critical difference between capital-raising exemptions and entity exemptions. By walking through a $15 million private equity hypothetical, he illustrates how investor count and wealth standards can accidentally trigger mutual fund-style regulations. Listen to understand why you should establish your 1940 Act exemption before setting your business model, minimums, or drafting your Private Placement Memorandum. Also see: The Investment Company Act Of 1940 From A Syndication Attorney's Perspective — https://www.moschettilaw.com/investment-company-act-of-1940/ Note: This episode's audio is generated using AI voice cloning technology based on Tilden Moschetti's written work. Watch the video on YouTube: https://youtu.be/iOiJN-glJ30
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What this episode covers
Sponsors often assume a Regulation D exemption handles all their securities requirements. In this field note, we explore why pooling capital to buy securities triggers the Investment Company Act of 1940, and why designing for exemption is the most practical strategy.
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