Regional Center Business Journal (07/2015)

Page 61

Education/research

SEC CENSURES UNREGISTERED EB-5 BROKER ACTIVITY

ROBERT J. AHRENHOLZ

MARIZA MCKEE

ESQ., PARTNER, KUTAK ROCK, LLP

ESQ., PARTNER, KUTAK ROCK, LLP,

O

n June 23, 2015, the Securities and Exchange Commission (the “SEC”) issued an order instituting an administrative and cease-and-desist proceeding pursuant to Sections 15(b) and 21(C) of the Securities Exchange Act of 1934 against two firms that brokered more than $79 million of investments by foreigners seeking U.S. residency pursuant to the EB-5 program (Securities Exchange Act of 1934 Release No. 75268) (the “Release”). The Release sets forth the actions employed by the unregistered brokers to cause the SEC

to bring its action, including: using a website to solicit EB-5 investors, helping investors to choose the regional centers to invest with, and receiving compensation for soliciting investors. The unregistered brokers agreed to be censured and to cease and desist from causing similar violations in the future, and further agreed to submit to administrative proceedings to determine whether monetary sanctions should also be imposed. This action comes on the heels of widespread reports that the SEC has been considering bringing actions against at least 20 firms

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and individuals for engaging in unregistered broker activities. As a result, more actions may be expected to be announced in the coming months. EB-5 practitioners should also be reminded that actions like these by the SEC also cause the firms and individuals involved to be deemed “bad actors,” thus precluding or restricting them from being involved in Regulation D offerings under Rule 506 and Regulation A offerings.

IIUSA is proud to host its 2015 Webinar Series, featuring a comprehensive array of EB-5 panel topics and an online event schedule designed to give you expert insights and analysis of crucial themes affecting the EB-5 Regional Center industry today. Visit www.IIUSA.org and click on the IIUSA Event Calendar.

7/30 – Banking & EB-5: Understanding the Roles of a Bank in EB-5 Transactions 8/20 – USCIS EB-5 Adjudication Trends: I-526/I-829 Petitions & I-924 Applications 9/10 – IIUSA EB-5 Advocacy Webinar: Pushing for Permanent Authorization of the EB-5 Regional Center Program*

9/24 – EB-5 Litigation: Strategies & Trends 10/29 – Form I-924A: Strategies for Fulfilling the Annual EB-5 Regional Center Reporting Requirement

11/19 – EB-5 Regional Center Project Case Studies: The Good, Bad, & Ugly 12/17 – EB-5 Industry Year in Review & Look ahead to 2016

VOL. 3, ISSUE #2, JULY 2015

IIUSA.ORG | 61


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