Legal Question in Securities Law in California

Securities lawyers like to say there are three kinds of initial public offerings: registered, exempt and illegal.

You are more or less correct that you cannot advertise to or solicit from the general public. Limited advertising and solicitation is permissible in a small IPO under certain guidelines, but not generally.

If you are seeing advertising that seems to be improper, refer to my first paragraph above. Maybe it is illegal. Maybe it is exempt. Or, possibly, these guys have gone through a registration exercise and are permitted to advertise.

As to your third question, you are going to need to retain a lawyer with experience in the investments and securities area in order to raise money from the public except in the very simplest, quietest, most private way. Any advertising, any dealings with strangers, will require full and strict compliance with state and federal securities laws. There are lots of books, both hard- and soft-cover, dealing with financing your business by selling stock to others. Most of them speak to selling stock in corporations, but the same principles apply (generally, at least) to other securities including memberships or ownership interests in LLCs, limited partnership interests, and so forth. I would advise using such books to get a feel for the area, then interview and retain an attorney with "Blue Sky" experience, and perhaps a CPA as well.