A three-question test determines if a capital raise counts as a securities offering under federal law: did investors put in money, expect financial returns, and is the return generated by the promoter's work? Yes to all three means securities law applies, regardless of what you call the deal.
3 questions. If your answers go a certain way, you're running a securities offering and federal law applies regardless of what your documents say. So question 1, did your investors put money into the deal? If yes, move to question 2. Question 2, are they expecting a financial return? If yes, move to question 3. Question 3, Is that return coming from your work? Are you the one running the deal, managing the asset, making the decisions while they wait for distributions? If you said yes to all 3, you have a securities offering. The Supreme Court has been clear on this since 1946. It means you're selling securities, so federal securities law applies to how you raise that capital. It means you need a valid securities exemption. Such as Rule 506 or 506 to legally raise the money. If you've been calling your deals a JV to avoid having to comply with securities laws, it doesn't matter. That's not how it works. Not knowing doesn't change what it is. What happens when people get this wrong and what the exposure looks like is explained in the long form. See the link in the bio.
