Tilden Moschetti: What does it
mean to have a fiduciary duty

for a syndicator or a fund
manager? It is a principal thing

that should be ingrained in your
blood. It should be a visceral

feeling that you have, that
you've got this fiduciary duty

and you treat your investors
appropriately. Now, what do I

mean by this, let's talk about
it in this video.

A fiduciary duty is simply
putting your the best interest

of your investors before your
own. Now that sounds very easy

and lofty, but what does it
exactly mean? There are five

principles of fiduciary duty,
the duty of loyalty, duty of

care, duty of confidentiality,
and the duty of impartiality,

and we'll go through each of
those. But basically, think

about your fiduciary duty this
way. This is the way I like to

think of it, your investors are
giving you an enormous amount of

money. They're giving you 50,000
100,000

sometimes over a million dollars
of their money. That's an

enormous amount of trust that
they're placing with you. And we

have to take that extremely
seriously, and that's why, when

I say you have got to feel it,
you've got to really feel that

level of trust. Because, man,
there are putting a lot of trust

in you, and you've better earn
it. So it's not and by earn it,

I don't mean you have to hit the
targets or else. I mean you just

got to do your very best for
them every single time and in

every decision you make, the
duty of loyalty is the first

main principle. It's the duty to
act in the best interest of the

investors, avoid conflicts of
interest and prioritizing the

goals of the syndication over
your personal gain. So by this,

what we really mean is, I like
to think of it as avoiding

conflicts of interest. Now,
there may be, there always are

conflicts of interest in a
syndication, but like taking a

kickback or things like that, is
never in your best interest of

your investors. It's okay to do
that, but I would disclose it up

front, like, for example, I'm
going to be paid, you know, by

10% of the development fee by
the developer who's going to be

hiring us for this, something
like that. Whatever it is, it's

got to be disclosed and made
super, super clear, because we

don't want even the appearance
of a breach of the duty of

loyalty. If you're not going to
be 100% you got to just tell

them, tell them that you're
doing it.

So that's the number one thing,
is, have this duty of loyalty.

The second key principle of
fiduciary duties is the duty of

care. Remember, they've given
you all this money. How would

you want your money manager or
your syndicator you've given all

of your money to to treat it?
You would want them to do every

single thing that they can in
order to take good care, nurture

it, Shepherd it, steward it,
whatever words you like, in

order to make sure that you get
what kind of return is possible.

So really it's making all those
good decisions, being thorough,

conducting good due diligence,
really just working hard and

being truly, truly professional
about every single element of

your syndication or your fund.
The third key principle of

fiduciary duty is a duty of
disclosure. It's telling your

investors about everything that
they need to know. If it's

material, they need to know it.
They don't need to know that the

third blade of grass finally
came, grew in. They don't need

to know that level of detail,
but they may need to know that,

hey, we had some vandalism that
took place on the property, and

it wiped out a whole section of
our thing. And now we've got to

go find a new gardener in order
to do this. Whatever that is

right, that's relevant, that's
material, disclosing that,

especially disclosing before
they invest right? So anything

that they might be interested
in, conflicts of interest,

especially that you're going to
be getting kickbacks, or how you

get paid, how what your
interests are in the property,

those sort of things should be
disclosed. Anything that could

change a potential investor from
a yes to a no, they need to know

about very, very clear, that is
the duty of disclosure, the

fourth principle of fiduciary
duty. And I take this one very

seriously, and I'm probably
different than a lot of other

syndication attorneys as it
comes to this, is the duty of

confidentiality. Your investors
are trusting you with a lot of

money. I've done quite.

Few syndications for myself. I
continue to do syndications, and

I have investors in my roster
who have invested in my

projects, who are well known
people, right? So they are

people who are sometimes
household names or people that

you probably have heard of as
well. It is paramount that their

their confidentiality is
maintained. They don't want

everybody knowing about well, we
this person invested in this

thing and this person invested
in that thing. It's not relevant

to everybody else. It's relevant
to them, to their investment

decision, maybe to their wealth
advisor, whatever. But it's not

relevant to every other
investor. I make sure that we

have this discussion when I'm
putting together a PPM and an

operating agreement, because I
think that duty of

confidentiality is very
important. I know as a as an

investor myself, I don't want my
how the amount of money that

I've invested, or even the fact
that I've invested in a certain

project, to be known unless I
really make it clear that I want

it to be known, which is
probably never the case. So that

duty of confidentiality is one
of the key

fiduciary duties, and it should
be a part of your syndication or

fund as well. The last fiduciary
duty is the duty of

impartiality. Now this actually
comes up a fair amount so, and

where it comes up most often is
in redemptions. So let's say

you've got a fund that has a
portfolio of $20 million and you

have decided, okay, we're going
to make available $2 million

that for redemption so people
can get their cash out. Because

we're shrink, starting to bring
down the portfolio size.

You have a choice to make, and
how you can apportion that, that

redemption availability, out to
your investors? You could just

go to your favorite investor,
but would that be fair to all

the other investors? No, it
would not be. We have to be very

careful to not favor other
investors, and not by dollar

amount either. So it doesn't
matter whether the you have

somebody who invested $50,000

and a million dollars, you need
to treat them fairly, but you

treat them fairly in proportion
to each other. So you may allow

a redemption for both those
investors, but it has to be in

proportion to their investment.
So that way it is truly

important, impartial on $1 for
dollar basis, not on a per

investor per investor basis.
That's the way I think is most

fair. It's the way nearly
everybody wants to put it in

their syndication documents as
well.

We have to favor things very,
very fairly and really think

about what is the fairest way to
do it for all of those investors

at the same time. My name is
Tilden Moschetti. I'm a

syndication attorney with the
Moschetti syndication Law Group.

We help invest syndicators and
fund managers just like

yourself, in order to be
compliant with all of the SEC

rules and state rules, and at
the same time, we help you

through this kind of decision
making on how to be the best

fiduciary you can be, because it
not isn't not just good business

and lawful, but it also makes
your investors happy, Which

means they stay with you and
keep investing with you. So it's

a good thing to be doing if we
can help you with your

syndication or your fun, give us
a call, set up an appointment,

and let's talk about what you're
working on.

You.