One question, every sponsor of a syndication or sponsor of a fund should think about for themselves is what are the consequences? If the fund or syndication does not make money or loses a considerable amount of money? What are those consequences? My name is Tilden Moschetti. I am a syndication attorney with the Moschetti Syndication Law Group specializing in Regulation D Rule 506b and 506c offerings. And today, we're going to go through that question.

Now, obviously, it's a worst case scenario, you've raised all this money, you've gotten that trust of your investors, who've given you quite a substantial amount of money, to put it into this investment, be it a real estate investment, or a business. It can happen though, that though that business or that real estate deal, loses money or loses a considerable amount of money, or perhaps it just doesn't meet expectations, maybe you thought it would have a great return, and it just didn't meet the mark, that investors and you had hoped for? Well, it's unfortunate that that does happen. But it is a investment and investments have risks. And hopefully it doesn't ever happen to you, for it just is a possibility that it could. So if that were to happen, what are the consequences to you? Well, if you've structured your deal correctly, and in a way where you've conveyed all of the risks properly to your investors, and you've set up a structure, that's fair, and I should definitely Asterix and as long as you have not committed fraud, because obviously, that would be a enormous problem. And if you are somebody who would do that, I hope you're not watching this video. And please don't do syndications or private equity funds at all. But if outside of fraud, it is within the realm of possibility that it will lose money, things do not always go up. We've seen deals in the recent past fall apart, and it has lost investors a lot of money, every now and then I do get calls from investors who have lost money. And most of the time I talked to them, I don't there's nothing I can do. Because it's not part of my practice, to enforce, you know, to talk to be a plaintiff's attorney, working with people who, who lost money in a syndication I don't that's just not part of my practice. But I do like to talk to them to kind of understand what happened and get a feel for what the layout is, and understand Well, where did things go wrong? Was the investment just bad from the beginning? Was there something shady going on? You know, and I'm always thinking in the back of my mind, is there somebody who I can send these people to most of the time there isn't. But occasionally, there will be somebody who I'm like, I know a good attorney to refer to that aside. So when I hear these deals, most of the time, it's something that was foreseeable, that fell apart. And that did fall apart, unfortunately. So in today's market, there's obviously a mortgage interest rate risk, right? If there is a spike, if the interest rate itself is variable, then a lot of people started losing money when interest rates started naturally climbing, that would have caught made the deal less and less viable, until till the point where some of these deals have clearly completely collapsed. Now, if the if all that risk was discussed to investors, there's probably not very much chance that they're going to recover from the syndicator, or the fund sponsor themselves. But if there were, if those risks weren't properly discussed in a private placement memorandum, and the rules set up of how that what to do in that situation, in the operating agreement, then there's a very real possibility that those investors, those investors who were injured, would have some recourse in order to collect money back themselves. So the bottom line is this, if you are a sponsor, your risk is very low, as long as you've talked about all those risks, all those consequences that may happen by your investors investing in this project, all the conflicts of interest that naturally occur, and that's why you need somebody who was really thorough and as a very competency syndication attorney, who can walk you through and setting up what is as close to bulletproof of a private play. So memorandum as you can make, now sure that you can still have it fall apart, because things can. But the whole goal is to make it such a document, that your investors just very much know what they're getting into. And they know that there's these risks out there. And as long as they've been described adequately in a way that they can understand, then you'll be protected. I hope that explains the answer to this question, and we'll talk again soon

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