(William B. Mack, Greenberg Traurig) 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.
