What does Regulation BI mean for the EB-5 industry ?
There are two key points that EB-5 projects using a brokerdealer for fund distribution need to consider under this regulation implemented by the SEC .
By Robert Cornish Jr .
O n Oct . 21 , 2024 , the Securities and Exchange Commission ( SEC ) Division of Examinations issued its annual report for its inspection priorities for the upcoming year . There were two things of note among many others . First , the EB-5 visa program was not specifically mentioned by the SEC as a target of increased inspection scrutiny . That certainly makes sense given the audit and inspection obligations imposed by the recent reforms to the EB-5 program . Second , and quite prominent , there were discussions about the implementation and enforcement by broker-dealers of compliance procedures for Regulation BI . The discussions generally echo the Commission ’ s emphasis on the need to protect retail investors through providing balanced presentations of risk not only at the point of sale but throughout that retail client ’ s relationship with their financial services provider .
What Does This Have to do With EB-5 ?
This regulatory scheme has been
around for a while , and the securities industry has been quite vocal regarding not only compliance obligations but the standards of care it imposes . A cursory review of the FINRA “ checklist ” for Regulation BI compliance by broker-dealers is a stark reminder as to why . The devil is purely in the details here , as the “ zinger ” for those in the EB-5 industry is the definition used by Regulation BI for a “ retail investor .” You may be surprised to learn that the “ retail investor ” of
Regulation BI is not subject to the same dichotomy as an “ accredited investor ” under Regulation D . In fact , a review of Regulation BI , and recent enforcement actions by the Financial
A “ retail investor ” includes a “ natural person ,” notwithstanding their status as accredited or non-accredited in the context of Regulation BI
Industry Regulatory Authority ( FINRA ) this year , make it very clear that a “ retail investor ” includes a “ natural person ,” notwithstanding their status as accredited or non-accredited in the context of Regulation BI . Thus , one who may invest in EB-5 securities is in
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