EB-5 Highlighted as a FINRA Regulatory Priority in 2015

The Financial Industry Regulatory Authority (FINRA) issued its annual Regulatory and Examinations Priorities Letter for 2015 newsletter to the financial services industry. FINRA is the SEC’s designated industry authority, regulating and overseeing the sales of securities. The link to the report is here. The report, for the first time to our knowledge, specifically mentions the EB-5 Investor…

The Financial Industry Regulatory Authority (FINRA) issued its annual Regulatory and Examinations Priorities Letter for 2015 newsletter to the financial services industry. FINRA is the SEC’s designated industry authority, regulating and overseeing the sales of securities. The link to the report is here.

The report, for the first time to our knowledge, specifically mentions the EB-5 Investor Visa as a regulated securities offering:

Private placements continue to raise concerns and will be an area of focus in 2015. These concerns remain relevant regardless of the investment sector, investment type (e.g., EB-5 investment funds, pre-Initial Public Offering investment funds, virtual currency funds), or the type of investor. Firms must file most private placement materials with FINRA pursuant to Rules 5122 or 5123 [emphasis added]. FINRA reviews firms’ private placements to determine whether broker-dealers performed sufficient due diligence on the issuer and the offering prior to recommendations to customers. 

Note the reference here to the FINRA Rule 5123 filing requirement, which has become the new industry standard for diligence. Only FINRA-registered broker-dealers may file Form 5123, and the filing receipt notice establishes an effort at the highest level of securities compliance.

This specific reference confirms our belief that EB-5 investments are regulated financial securities and , even though they are specifically an immigration requirement, EB-5 exempt from the SEC’s requirements for offering investments.

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