May 25, 2020

SEC and FINRA Name EB-5 Priority in 2016

Earlier this month, the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) each published their 2016 exam priorities letters. Each agency publishes an exam priority letter annually in which they identify topics of examination focus for the coming year, recurring challenges faced by firms, and perceived areas of heightened risk to investors and/or the integrity of the U.S. capital markets.

This year, for the first time, the SEC letter specifically mentions EB-5 as an exam priority. The SEC indicated that it will review offerings involving the EB-5 program to evaluate whether legal requirements are being met in the areas of due diligence, disclosure, and suitability.

FINRA, which regulates broker-dealers, also called attention to the EB-5 program in its exam priorities letter. FINRA notes in 2016 it will address concerns that relate to suitability, disclosure and due diligence for private placements, including those made pursuant to the EB-5 program. FINRA made a similar reference to the EB-5 program in its 2015 exam priorities.

In 2015 the SEC brought enforcement actions against several individuals and firms for unlicensed sales of EB-5 securities. As the EB-5 industry matures, those in the industry can expect to see even more attention from regulators.

To view a copy of the SEC’s letter, please click here.  To view a copy of FINRA’s letter, please click here.

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About this Author

William B. Mack, Greenberg Traurig Law Firm, New York, Finance Law Attorney

William B. Mack is part of the firm’s government affairs and financial regulatory and compliance groups. He is experienced in advising companies on regulatory and compliance matters relating to the Securities and Exchange Commission regulations, the Exchange Act, Anti-Money Laundering laws and Financial Industry Regulatory Authority (FINRA) rules.

William’s practice involves all aspects of broker-dealer regulation, including Self-Regulatory Organization (SRO) membership, supervision, employment, research, soft dollar arrangements, chaperoning of...