The Securities and Exchange Commission (SEC) and US Citizenship and Immigration Services (USCIS) are increasingly concerned about EB-5 Regional Centers acting as unlicensed broker-dealers. With that in mind, investors, immigration attorneys, agents and finders should all be aware of a powerful due diligence tool.

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“The SEC approved new FINRA Rule 5123 to require each FINRA member firm [aka “broker-dealer”] that sells an issuer’s securities in a private placement [aka an EB-5 investment] … to file with FINRA a copy of any private placement memorandum, term sheet or other offering document the firm used within 15 calendar days of the date of the sale ….The rule becomes effective December 3, 2012, and applies prospectively to private placements that begin selling efforts on or after that date.” – FINRA Regulatory Notice 12-40

Any regional center, if it is properly selling investments, should produce a FINRA Rule 5123 Filing Receipt

This proves:

  1. The required broker-dealer has been central to the sale of the securities – which eliminates the concern that you may be working with an unlicensed broker-dealer.
  2. The offering has been reviewed by the broker-dealer with the high due diligence standards expected by the Financial Industry Regulatory Authority, Inc. (“FINRA”).
  3. FINRA, the SEC-designated regulatory authority, is in possession of the offering documents for securities compliance, and
  4. Sales of the offering transpire under the supervision of the broker-dealer – reducing the potential for misrepresentation.

Requiring one simple document allows investors, immigration attorneys, agents and finders to verify the securities-compliant status of the offering without having any individual expertise.