SEC
SEC
It is important, however, to
understand that the SEC was not
created to monitor and regulate the
EB-5 industry. Instead, it was created in the 1930s with the passing
of the Securities Act of 1933 and the
Exchange Act of 1934, long before the
EB-5 program was even created. The SEC’s
primary mission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate
capital formation. The SEC’s interest in EB-5 solely arises out of
the fact that EB-5 has become an important part of the United
States’ capital markets system.
er, they do get things right, and they
do a good job of carrying out their
mission. It is easy to forget that the
SEC is just doing its best to carry out
the mission that has been assigned to
them. In some cases, such as with certain parts of the Jumpstart Our Business
Startups Act (JOBS Act), the SEC actually
opposed the laws that they were later required
to enforce. The SEC tries to oversee the trillions of
dollars that flow through the American economy with a fairly
limited budget and staff. In general, I think they do a pretty
good job.
The primary tenets behind the SEC’s existence and enforcement policies are plainly stated on their website as:
When it comes to the U.S. capital markets, compliance with
the securities laws and the SEC is always a burden, but it is
a burden worth appreciating and respecting because that is
what makes the U.S. market so desirable, efficient, and safe.
Remember the Chicago Convention Center EB-5 offering? The
EB-5 investors might have lost a little bit of money in ancillary
and miscellaneous fees here and there, but thanks to the SEC’s
oversight, the EB-5 investors received a return of 100 percent of
their capital contributions.
1. Companies offering securities for sale to the
public must tell the truth about their business,
the securities they are selling, and the risks
involved in investing in those securities; and
2. Those who sell and trade securities – brokers, dealers,
and exchanges – must treat investors fairly and honestly.
“It is not the SEC’s goal to ensure that
every investment is a good investment
or that it will be successful.”
The idea is that if the SEC can oversee a system of open
and adequate disclosure, it will create a safer environment
for investors, while improving the capital formation process
for companies seeking to raise capital. The SEC understands
that investments are risky and entail the possibility of losing
capital. It is not the SEC’s goal to ensure that every investment
is a good investment or that it will be successful. All they
want to do is make sure that a system exists whereby people
who are buying securities are fully-aware of the risks of their
investments and that the advisers who are helping them (such
as brokers and investment advisers) are properly licensed and
doing business fairly.
While many view the SEC as an annoyance and hassle, the
agency plays an extremely important and valuable role in the
U.S. capital and securities market. Though I have many friends
at the SEC and the existence of the SEC helps me earn a living,
I have to admit that sometimes I, too, am frustrated by the
SEC. On occasions, I think they get things wrong. Once in a
while, I even know that they get things wrong. Usually, howev-
“The U.S. Securities and Exchange
Commission should not scare you.”
The U.S. Securities and Exchange Commission should not
scare you. Sure, not all of their policies will be welcome and
they will drive up transaction costs, but they help make EB-5
a safer place for all of us involved. Learn more about why the
SEC exists, and how it protects investors and the overall market
by visiting the following website: http://www.sec.gov/about/
whatwedo.shtml
★
Jor Law
w w w. E B 5 I n v e s to r s . c o m
Jor Law, Esq. is a co-founding shareholder with
Homeier & Law, P.C., a corporate and securities law
firm. He represents large companies as well as startup and emerging companies and individuals in the
areas of M&A, finance, secured lending, securities,
technology, and other corporate transactions. He is
widely recognized as a leading corporate/securities
attorney in the EB-5 industry and routinely speaks
around the world at EB-5 industry
events. He is also the co-founder of
VerifyInvestor.com, which provides
accredited investor verification
services for capital raising and
securities law compliance.
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