I look over the paperwork, including a series of increasingly heated letters between Bill s lawyer and Massachusetts. Not unexpectedly, I don t get a clear answer. Even though everything is coming together in Bill s business, he might find himself out of business because he did not comply in a timely fashion with the Massachusetts securities law. The tragedy is that this ending was avoidable with a little planning. You want to avoid registration like the plague unless you really intend to do a public offering with investment bankers and a fancy prospectus.
Registration is time consuming and very expensive.
So the name of the game is to find an exemption from registration-hopefully one that does not involve making any filing with federal or state agencies. As a result of the adoption of Regulation D by the SEC, it is usually possible to avoid any cumbersome filings at the federal level. A more serious problem arises at the state level. You must comply with the law of each state in which a purchaser resides. Some exemptions require a filing before you can offer and require a waiting period of five to ten days.