Alternative Investments Podcast (Clip 7 of 8) – Reg-D

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Alternative Investments Podcast – With Strategic Capital & Waterloo Capital

Don Simoneaux talks about Reg D changes; changes to accredited investor requirements, and how the regulatory and market backdrop has affected Alternative Investments in the past few years. Learn how to work with Strategic Capital – Registered Investment Advisors in Austin, Texas.

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 Episode 4 Podcast/audio/video Clip (7 of 8)

Regulation D – and a general discussion on Alternative Investments and Private Placements

Meet Don Simoneaux – Alternative Investments Waterloo Capital

Don Simoneaux and Bobby Russell talk about changes to the Reg D landscape; accredited investor regulations, and how alternative investment markets were impacted from regulatory changes in the recent past


Moderator: (…for sure) let’s talk a little bit about changes that have happened recently… In 2020 there were changes to the stipulations or the general guidelines, for, let’s say accredited investors and above but also there’s been some changing at least sound bites from guys like Gary Gensler and others who are on the public stage from a governmental or regulatory perspective how have things changed in your view, regarding let’s say, Reg D, or private offerings in on the back of this landscape of cryptocurrency and all these other things that are coming to Market from a private placement perspective can you talk a little bit about some of that?

Don Simoneaux (Director of Alternative Investments, Waterloo Capital): Yeah sure. So (the) crypto space is, you know kind of a different market right now they’re kind of in the midst of you know, looking at increased regulation there. You know, we haven’t recommended cryptocurrency to our clients from a fiduciary standpoint. Though we (recommend), or we realize that you know, it might be appropriate to have some exposure there… However, we’re not making a broad investment recommendation in that space. 

Don Simoneaux (continued): But as it relates to some of the changes: the jobs act – really helped define exactly how accredited investor definitions really changed. It allows for people that are licensed or registered brokers to, you know, become an accredited investor and also outlined: individuals that have demonstrable education or job experience that will qualify them as having a Professional Knowledge. So, that, it broadened out the definition of what accredited investors are and we see that as a positive. We think broader access to the alternative investment space is welcome, however, we want to make sure you know as a fiduciary and allocator we want to make sure that our clients are only investing where appropriate. Appropriateness is something that as an RIA we take very seriously. We want to make sure that the types of strategies that we’re recommending fit within our clients’ long-term goals and objectives. 

Don Simoneaux (continued): You know, if you look at, sort of, trends in the space recently – like groups like Blackstone have really entered the space – the retail space very hard, kind of raising, you know tens of billions of dollars in the B-REIT platform, you know, they’re launching out some of their private credit strategies in the space and also, you know, what they’re doing in, the private equity space as well. You know those types of investments could be appropriate however, when you’re investing in illiquid asset classes and trying to put it into a liquid wrapper, there can be issues with liquidity so: you know, B-REIT was in the news a lot over the last few months, gating investors based on the fact that they had more Redemption that they were allowed to send out. (It) didn’t necessarily mean there was anything wrong with the assets but you know the fact of the matter is when you invest in you know, commercial real estate buildings these are inherently illiquid Investments, so matching liquidity with structural frameworks around some of these strategies is important, and that’s something we look at whenever we’re evaluating some of these more retail-focused products that have lower accreditation requirements and so you know, that’s a risk just like equity risk, or interest rate risk – that’s a risk that we have to account for, and so even though that the market has gotten, you know, a lot more open and um, you know, broaden out the definition for the types of investors that can go in as an advisor; we always have to make sure okay: you know they might be accredited now but, is allocating to this strategy: is it appropriate?