LOS ANGELES—“A major thing your are going to see is that the SEC will come in and slap a lot of hands,” Ryan Tooley, managing director at RCS Capital, said on the crowdfunding panel at CCIM Thrive. “People are operating in an unregulated way, and that is a big issue. People will get shut down either advertently or inadvertently letting non-accredited investors into their crowds.” The comment was part of a larger discussion amongst the panelists about the highly regulated environment in which they operate.

Moderated by Wayne D'Amico, CCIM, the 2013 president and chairman of the CCIM Institute, the crowdfunding panel included Elizabeth Braman, CCIM, chief production officer at Realty Mogul; Dee Hunter, managing director at NNN Crowd; and Gene Trowbridge, CCIM, syndication lawyer at Trowbridge Taylor Sidoti LLP, in addition to Tooley.

D'Amico began the conversation by asking the panelists, “What is your crowd?” The panelists noted that a crowdfunding crowd is incredibly diverse, ranging from debt to equity to a combination. “This has been done for years through syndication, but it wasn't called crowdfunding,” said Hunter. “What is different is our ability to market the deals.”

When talking about the regulatory environment, the panel spent a significant portion of the time discussing the definition of an accredited and whether real estate crowdfunding should be available to non-accredited investors as well. “We give investors the opportunity to invest in deals that they would not otherwise be able to invest in. They have a high income but not as high as the investors that would typically have access to these deals,” explained Hunter, while Braman added that an investor with $100,000 now has access to 10 different deals. For the unfamiliar, Trowbridge explained the definition of an accredited investor: an individual with an annual income of $200,000 or a net worth of $1 million. He noted as well that the definition of net worth was recently altered to exclude a primary home or residence.

While all of the panelists agreed that the crowdfunding environment is highly regulated and they operate within those regulations, they did note that not everyone does. It is the “responsibility of the sponsor to vet an investor,” explained Trowbridge. Those platforms that are not properly vetting investors may be unknowingly breaking SEC regulations. “We are all about transparency, and we fully vet all of our deals,” said Braman. “We are taking passive real estate investors and active real estate investors and marrying the two. We want to service smaller investors and give them the opportunity. We won't ever be 100% institutional.”