Search results for: social media

Under a new State Department policy, virtually all visa applicants to the United States are now required to submit information about social media accounts they have used in the past five years.

Applicants for immigrant and nonimmigrant visas must use the State Department’s Consular Electronic Application Center (CEAC) to complete online forms for nonimmigrant (DS-160) or immigrant (DS-260) visas. The Department has updated its immigrant and nonimmigrant visa forms to request additional information, including “social media identifiers,” from almost all U.S. applicants.

The new visa application forms list a number of social media platforms and require the applicant to provide any account names they may have had on them over the previous five years.

Applicants have the option of stating they do not use social media. However, failure to provide accurate and truthful responses in a visa application may result in denial of the visa by a consular officer. An individual’s social media footprint will provide consular officers with a snapshot of contacts, associations, habits, and preferences. Consular officers will likely look for inconsistencies and possible security concerns on a broad range of issues.

This action amplifies the measures outlined by the U.S. Department of Homeland Security in its September 2017 proposal calling for the review of social media records by all immigrants. This marks a significant shift from prior policy under the Obama Administration, which asked visa applicants to submit social media records on a voluntary basis.

In addition to their social media histories, visa applicants are now asked for five years of previously used telephone numbers, email addresses, international travel, and deportation status, as well as whether any family members have been involved in terrorist activities.

Under the new policy, both temporary visitors and those seeking permanent residence are required to fill out the new forms. Only applicants for certain diplomatic and official visa types will be exempted from this requirement.

Please consult your GT attorney for additional information and check back here for updates.

For more on social media and immigration policy, click here.

The Department of State (DOS) has noticed for public comment an Information Collection Review – Electronic Application for Immigrant Visa and Alien Registration  that would require immigrants coming to the United States to submit five years of social media history. This effort is viewed by many as a component of “enhanced vetting” on behalf of the Administration following domestic terrorist activities.

DOS stated its intention to require nearly all immigrant and non-immigrant visa applicants to the United States to submit five years of social media handles, as identified by the government, with the option of requesting additional information for platforms not explicitly required.

If the proposed requirements are approved by the Office of Management and Budget (OMB), applicants would be required to list social media platforms, provide account names, and give applicants the ability to voluntarily provide additional information on social media activity not covered by the proposed rule in addition to other personal information.

For those interested in tracking the proposed rule, please use the OMB control numbers listed below.

For assistance submitting comments, please contact your Greenberg Traurig attorney.

In this episode of the Immigration Insights podcast series, Kate Kalmykov, co-chair of Greenberg Traurig’s Immigration & Compliance Practice, is joined by Don Aviv, CEO of Interfor International, to tackle the evolving intersection of global mobility and security.

Together, they examine how geopolitical instability, technological advances, and regulatory changes are reshaping the landscape for businesses and individuals moving across borders.

From the heightened risks of data breaches and device searches to the growing impact of social media and AI on both immigration and corporate security, Don shares practical strategies for risk assessment, data protection, and crisis preparedness.

The conversation highlights the need for close collaboration between immigration counsel, HR, and security professionals, and emphasizes the importance of proactive planning—especially as companies navigate new markets, respond to policy changes, and protect high-value employees and sensitive information around the world.

Click here to listen to full episode.

On Aug. 19, 2025, U.S. Citizenship and Immigration Services (USCIS) updated its policy manual to provide guidance on how USCIS officers should exercise discretion when reviewing immigration benefit requests. Specifically, the guidance clarifies that USCIS officers will carefully consider an applicant’s entire immigration record and weigh both positive and negative factors before making a decision on whether to grant an immigration benefit. This update specifically emphasizes considerations related to any involvement in anti-American or terrorist organizations, past requests for parole, and antisemitic activity.

The updated policy also provides guidance on how USCIS officers should exercise discretion when adjudicating EB-5 investor petitions in cases involving threats to national interest, fraud, deceit, misrepresentation, and criminal misuse.

Key Highlights:

  • Negative Discretionary Factors: USCIS will assign “overwhelmingly” negative weight to any past conduct supporting terrorist organizations, promoting anti-American ideologies, and endorsing antisemitic terrorism or related ideologies.
  • Anti-American Activity: USCIS has expanded social media vetting to include reviews for anti-American activity. Any support, promotion, or endorsement of anti-American ideologies or organizations will be considered an overwhelmingly negative factor.
  • Association with Terrorist or Antisemitic Groups: Any involvement with or support for terrorist organizations, antisemitic terrorism, or related ideologies will have significant negative impact.
  • Past Parole History: USCIS will consider whether prior parole requests were made in good faith and in compliance with applicable laws and policies in effect at the time.  
  • EB-5 Investor Petitions: USCIS specifically noted that it will apply discretion in cases involving threats to national interest, fraud, deceit or misrepresentation, and criminal misuse. This will apply to both standalone and regional center investor petitions.

The new guidance is effective immediately and applies to all cases pending or filed on or after Aug. 19, 2025, and supersedes any related prior guidance.

For more detailed information, please refer to USCIS policy alert.

For foreign nationals navigating the U.S. visa process, few immigration experiences are more frustrating than hearing the words “administrative processing” after a visa interview. This additional review step can derail carefully planned travel dates, job start dates, family reunifications, and educational opportunities. Understanding what administrative processing entails and how to navigate it effectively can help you better prepare for and manage these delays.

What Is Visa Administrative Processing?

Administrative processing is the term used by U.S. consular posts when a visa application cannot be immediately approved at the time of interview. The Foreign Affairs Manual (FAM) defines administrative processing as “clearance procedures or the submission of a case to the Department.” According to recent guidance from the American Immigration Lawyers Association (AILA), this occurs when the FAM references “overcoming a refusal under INA 221(g) in two instances: when additional evidence is presented, or administrative processing is completed.”

A visa refusal under section 221(g) of the Immigration and Nationality Act (INA) means the applicant did not establish eligibility for a visa to the satisfaction of the consular officer, as is required under U.S. law, specifically section 291 of the INA. Importantly, cases placed in administrative processing will show a status of “Refused” on the CEAC application tracking system until the processing is resolved, even though this is not a final refusal.

Limited Transparency by Design: The FAM specifically counsels consular officers not to reveal to visa applicants the specific reason for administrative processing in a given case, stating that “Posts should not inform interested persons, including attorneys, that a case has been referred to the Department for a name-check or an advisory opinion.” This inherent non-transparency can be particularly frustrating for applicants trying to understand delays.

Common Triggers for Visa Administrative Processing

The AILA guidance identifies several common triggers that can lead to administrative processing:

Missing Documentation: The most straightforward trigger occurs when essential documents are missing from the application. Consular officers will provide a written notice listing required documents, which must be submitted within one year to avoid final refusal.

Further Consultation: A consular officer may determine that circumstances require further internal consultation within the mission or with the Department of State. This type of case normally requires an advisory opinion from the Office of Legal Affairs in the Bureau of Consular Affairs Visa Office and occurs when issues arise during the interview or are based on information in the record that makes it impossible to render a decision at the completion of the interview.

Database “Hits”: All visa applicants have their biographic and biometric data checked against various databases. If these checks indicate a possible match (or “hit”) to a person about whom the U.S. government holds adverse watchlist information, consular officers must “clear” the hit by seeking confirmation that the person applying for the visa is not the same person on the watchlist before issuing the visa.

Technology Alert List Concerns: Administrative processing can result from certain visa applications where the applicant’s intended commercial or academic activity triggers concerns about the possible illegal transfer of technology as defined in the Technology Alert List (TAL). When a consul encounters an applicant who intends to pursue activities in one of the areas included on the TAL, the consul must submit an inquiry to the Department of State for a determination of whether the risk is significant enough to require visa denial.

Security Clearances: These involve various types of background checks, including:

  • Name checks for biometric or biographic matches to watchlists (known as “Visa Donkey”)
  • Technology-related concerns under Security Advisory Opinions involving sensitive or dual-use technology (known as “Visa Mantis”)
  • Nationality-based reviews for nationals from certain countries, particularly those from state sponsors of terrorism (known as “Visa Condor”)

Understanding Security Advisory Opinions (SAOs)

For individuals in technology, research, or certain other fields, Security Advisory Opinions represent one of the most common—and potentially lengthy—forms of administrative processing. These requests for security clearances fall into several categories, commonly referred to by their internal names:

  • Visa Donkey: For name checks when database searches indicate possible matches to watchlist information
  • Visa Mantis: For cases involving sensitive or dual-use technology concerns
  • Visa Condor: Triggered by national security concerns, including potential terrorist activity risks. Factors leading to a Condor SAO are usually the applicant’s country of birth, citizenship, or permanent residency, especially if that country is known as a state sponsor of terrorism (these include Cuba, Iran, North Korea, and Syria). Applicants typically subjected to such an SAO are those born in, or residents of, approximately 26 countries, though as the criteria are classified, the exact list of countries is not publicly available

Additional SAO Categories: According to available sources, there are approximately 9-12 different types of SAOs, including specialized categories such as Visa Bear (for foreign government officials and international organization representatives), Visa Horse (for diplomatic visa holders of certain nationalities), Visa Pegasus (for officials of Commonwealth of Independent States), Visa Eagle (for certain nationals seeking immigrant or K visas), and Visa Merlin (for refugees and asylees). Many of these categories are designed for specific diplomatic, governmental, or refugee contexts and may be less relevant to typical employment-based or family-based cases.

The Department of State claims that 80% of SAOs are cleared within two weeks, but the general expected time for a clearance is unknown. However, according to the State Department, most administrative processing, including SAOs, is completed within 60 days of the visa interview. The FBI reports that 97% of certain types of SAOs are completed within 120 days.

For individuals whose work involves sensitive technology or dual-use applications, the wait time for SAOs varies between two weeks and six months, depending on how complex the case is. This process is particularly common for nationals from certain countries or those working in fields listed on the Technology Alert List.

Recent Developments Affecting Processing Times

Visa applicants should be aware of recent policy changes that may impact processing times. On June 18, 2025, the Department of State (DOS) instructed consulates worldwide to implement a mandatory expansion of social media vetting for all F, M, and J visa applicants (students and exchange visitors), requiring applicants to make all social media accounts public while consular officers conduct thorough reviews of their entire online presence. While this currently applies to student and exchange visitor visas, it signals an overall trend toward enhanced screening that may affect other visa categories.

What to Expect During Administrative Processing

Non-transparency is Normal: As the AILA guidance notes, officers rarely provide specific reasons for administrative processing. This lack of information can be particularly challenging for applicants trying to plan around travel or relocation timelines.

Status Changes: The visa status page will show “Refused” until processing is resolved, then update to “Approved” and finally “Issued.” Most cases finish within about 60 days, but a small percentage can run several weeks to as long as 12 months.

Key Tracking Systems Used in Visa Processing

Understanding the various tracking and screening systems can help you better navigate the visa process:

CEAC (Consular Electronic Application Center): This is the primary online portal managed by the U.S. Department of State where applicants can track their visa application status, upload documents, and receive notifications. Both immigrant and nonimmigrant visa applicants use CEAC to monitor their cases. During administrative processing, CEAC will show a status of “Refused” until the processing is completed and resolved.

CLASS (Consular Lookout and Support System): This is the principal database system used by consular officers to perform name checks on visa and passport applicants. CLASS contains information from the FBI, Drug Enforcement Administration, and Department of Homeland Security to identify individuals who may be ineligible for visa issuance or require special action. According to government reports, CLASS contained more than 42.5 million records as of 2012. However, it’s important to understand that the Department of State functions primarily as a benefits agency rather than an enforcement agency. When a “hit” occurs in CLASS, consular officers typically have access only to limited summary information indicating a potential match, but not the detailed underlying records or investigations. To obtain the complete information necessary to make a final determination, the Department of State must request clarification from the actual law enforcement agencies (such as the FBI, DEA, or CIA) that maintain the detailed records, which is why Security Advisory Opinions are often necessary and can take considerable time to resolve.

CCD (Consular Consolidated Database): This comprehensive database contains over 290 million passport records, 184 million visa records, and 25 million records of U.S. citizens living overseas. Through the CCD, consular officers can access an applicant’s complete visa history, including previous applications, approvals, denials, and any comments from prior consular officers.

These systems work together during the visa screening process, and understanding their roles can help explain why processing times may vary and why certain applications trigger additional review.

Recurring Processing: Some applicants may be subject to administrative processing every time they apply for a visa, particularly when interagency policies require it. Review prior visa annotations to anticipate potential delays.

Practical Considerations for Managing Administrative Processing

Documentation Preparation:

Thorough Preparation: Arrive at visa interviews with complete documentation and a clear, concise explanation of your background, activities, and purpose of travel.

Technology Workers: If you work in technology or research fields, prepare clear explanations of your work that address potential dual-use technology concerns. According to State Department guidance, providing detailed documentation can significantly help in Visa Mantis situations. Consider preparing comprehensive documentation including: detailed descriptions of your work and specific job duties; information demonstrating that any technology involved is commercially available and in the public domain; documentation showing that the Department of Commerce has determined the technology is not “sensitive” and does not require an export license; and evidence that your work has no potential dual-use concerns. Providing consular officers with complete information upfront can significantly reduce delays in visa processing times.

During Administrative Processing:

Follow DOS Guidelines: Wait at least 180 days before submitting status inquiries unless there is an emergency. After that, contact the consular post using official channels, and if no response in 30 days, follow up again.

Avoid Refiling: Submitting a new visa application while one is pending does not help and often causes additional delays.

Document Everything: Keep detailed records of all communications with the consular post and any instructions received.

When to Seek Additional Help

The AILA guidance suggests several escalation options when administrative processing extends beyond normal timeframes:

Congressional Liaison: This can be helpful in cases with long delays or compelling humanitarian concerns, but contact must come from a U.S.-based petitioner or family member.

Legal Action: In extreme cases, consider mandamus lawsuits to compel adjudication, though this should be done with experienced litigators familiar with federal court actions against the government.

Emergency Requests: For urgent humanitarian or business needs, you may be able to request expedited processing, though approval is not guaranteed.

Prevention and Preparation

While administrative processing cannot always be avoided, certain steps can minimize the likelihood and impact:

Complete Documentation: Ensure all required documents are complete and accurate before your visa interview.

Legal Counsel: Work with experienced immigration attorneys who can help identify potential issues and prepare appropriate responses.

Early Planning: Start visa processes well in advance of planned travel or relocation dates to account for potential delays.

Regular Monitoring: Check your CEAC status regularly and stay informed about policy changes that may affect processing times and requirements.

Reassurance for Applicants

Despite the anxiety that administrative processing can cause, there is important reassurance to be found in the process itself. Cases are generally not sent for administrative processing unless they are otherwise approvable. As noted in AILA’s guidance, administrative processing typically “signifies that the applicant has satisfied the statutory requirements for the visa… It also usually means that there is no pre-existing ground of inadmissibility against the applicant.”

Perhaps most importantly, the number of visa applicants who are actually denied visas following administrative processing is very small. While administrative processing delays are disruptive and concerning, the vast majority of cases that enter this process are ultimately approved once the additional review is completed.

Important Legal Limitation

It’s crucial for applicants to understand that visa denials are extremely difficult to redress due to the “doctrine of consular non-reviewability.” This doctrine, recently reaffirmed by the U.S. Supreme Court in Department of State v. Muñoz (2024), holds that federal courts generally lack authority to review consular decisions denying visas. The doctrine is based on Congress’s plenary power over immigration and the Immigration and Nationality Act’s failure to authorize judicial review of consular decisions. Even in the rare cases where limited review might be available (typically involving constitutional rights of U.S. citizens), the government need only provide a “facially legitimate and bona fide reason” for the denial, and courts will not look behind that reasoning.

Looking Forward

As security screening continues to evolve, applicants should expect that administrative processing will remain a regular part of the visa landscape. Congress and U.S. security agencies view SAOs as vital to national security which make it difficult to influence the process. However, understanding the process, preparing thoroughly, and working with experienced counsel can help minimize delays and manage their impact on your travel and life plans.

The key is building flexibility into your immigration planning while maintaining realistic expectations about timelines. For those navigating the U.S. visa system, this means starting visa processes earlier, building contingency plans, and working closely with immigration counsel to navigate an increasingly complex landscape. This article incorporates guidance from the July 2025 article, American Immigration Lawyers Association’s “Practice Pointer: Understanding and Addressing Administrative Processing in Visa Cases.”

Last week, the House Judiciary Committee considered H.R.5203, the Visa Integrity and Security Act of 2016, which was introduced May 12, 2016, by Representative Randy Forbes of Virginia.

The bill’s purpose, as reported last week in a section-by-section breakdown is to enhance security procedures for the processing of both immigrant and nonimmigrant visas. The bill will impact how both immigrant and nonimmigrant visas are processed, and we discuss below how this may affect those who apply for either visa at a U.S. consulate or embassy abroad, or those who submit a petition or application to the Department of Homeland Security (DHS) United States Citizenship and Immigration Services (USCIS).

Petition and Application Processing, Section 2:

  • All petitions and applications filed with DHS or at a U.S. consulate with a consular officer must contain all required signatures.
  • For immigrant visa applications, the application must be signed in front of the consular officer.
  • All documentation, regardless of whether it is in support of an immigrant or nonimmigrant visa application, must be translated.

Possible Implications:

Previously, immigrant visa applications (Form DS-260) were not signed in front of the consular officer, but rather submitted online. This should not pose a burden to the applicant at the time of the interview.  With the requirement of translated documents, previously it was not required at the U.S. consulate if the language was native to that particular country.  For example, applicants applying to enter the United States in L-1B status at the U.S. consulate are required to show a professional degree, but that degree need not be translated if the language is the native language of the U.S. consulate’s location.

Background Checks and Other Screening Requirements, Section 211B:

  • General Background Check: Background checks/screening required for all nonimmigrant and immigrant processing, for both principal applicants as well as dependents.
  • Security Advisory Opinion: The following categories of people are required to have a security advisory opinion:
    • Nationals of Iran, Iraq, Libya, Somalia, Syria, Sudan, Yemen; or
    • Any other country the Secretary deems appropriate.
    • Exceptions are given to certain international travel; moreover, the consular officer can determine whether a security advisory opinion is needed.
  • Social Media Activity: The background check shall include a search of public information on the internet of the applicant, including social media activity.
  • DNA Testing: DNA testing will be required for petitions and applications based upon a biological relationship. The genetic testing, at the expense of the applicant(s), must be obtained proving the biological relationship, and must be submitted at the time of the application.
  • Interviews: DHS must conduct an in-person interview with every person seeking “any benefit” under the INA, with the exception of a work authorization.  The interview requirement may be waived for those under 10 years of age.

Possible Implications:

  • General background checks have been conducted in the past of every person.
  • The requirement of a security advisory opinion of certain nationals could delay processing, and thus it would be recommended that applicants from the named countries allot for extra time to apply for either an immigrant or nonimmigrant visa stamp. In addition, it must be noted that the need for a security advisory opinion is not limited only to the listed countries. The Secretary has the discretion to add to the list of countries, and the consular officer may determine at the time of the interview whether an individual will need the security advisory opinion.
  • A search of an applicant’s social media activity is currently limited to public information. It would be wise for applicants to be mindful of things posted on the internet.
  • The requirement for a DNA test to prove biological relationship will likely be a burden, both financially and in terms of time, especially if a principal applicant has a number of dependent applicants.
  • The interview requirement would be an addition to the requirement already applied to one who is applying for an immigrant visa abroad. There are no interview requirements currently for those who submit an adjustment of status application in the United States, though DHS reserves the right to request an interview.

Burden of Proof, Section 5:

Section 5 of the bill amends section 291 of the INA concerning the burden of proof upon a petitioner or applicant for an immigration benefit.  The proposed amendment would change the current standard, “to the satisfaction of the consular officer” to the standard that each individual prove eligibility or admissibility by “clear and convincing” evidence.

Possible Implications:

The higher burden of proof gives the consular officer or the reviewing USCIS officer broader discretion when adjudicating an application or petition. For beneficiaries, this means that having the most documentary evidence is pertinent to the success of the application/petition.

GT will monitor the House Judiciary Committee’s consideration of this legislation and will provide updates here in relation to the bill’s progress in the House of Representatives.  It should also be noted that the House Homeland Security Committee will be marking up H.R. 5253, the “Strong Visa Integrity Secures America Act” on June 8, 2016.

Today, the House Judiciary Committee will consider H.R.5203, the Visa Integrity and Security Act of 2016.  The bill is authored by Representative Randy Forbes of Virginia.

The bill’s purpose is to enhance security procedures for the processing of both immigrant and nonimmigrant visas.  We provide a sectional summary of the bill below.

Section 2 of the bill adds new section 211A to the Immigration and Nationality Act (INA) to require that all petitions and applications filed with the Department of Homeland Security (DHS) or a consular officer contain all required signatures.  In the case of immigrant visa applications, the bill requires that each application shall be signed in the presence of the consular officer, and verified by oath.  Section 211A also specifies that all documentation provided in support of either an immigrant or nonimmigrant visa must be translated into English.  Section 211A requires that no petition or application may be approved until any additional information requested by DHS or a consular officer is provided consistent with any deadline specified in the request.

New section 211B mandates that background checks be conducted for all petitioners or applicants to determine whether an individual poses a “national security threat” or is otherwise ineligible for a visa or admission to the United States.  The background check required in this section “shall include” a review of each individual’s social media activity.  Further, the section requires that for nationals of Iran, Iraq, Libya, Somalia, Syria, Sudan, Yemen, or another country the DHS Secretary “determines appropriate,” a security advisory opinion must be completed prior to issuance.  The section outlines certain exceptions to this requirement.

In the case of petitions and applications based upon a biological relationship, section 211B requires that a genetic test must be obtained proving the biological relationship between petitioner and beneficiary, and that such test must be submitted at the time of application.  The bill specifies that the test shall be obtained at the expense of the petitioner or applicant.  Finally, the section requires that DHS must conduct an in-person interview with every person seeking “any benefit” under the INA, with the exception of a work authorization.  The section permits the Secretary to waive this requirement for individuals 10 years of age or younger.

Section 3 directs DHS to prepare a plan for the use of “advanced analytics” software to detect immigration benefit fraud and potential national security threats.  Section 3 also requires DHS to complete a benefit fraud assessment by fiscal year 2021 for the following visa categories: VAWA self-petitioners, visas issued under section 101(a)(15)(K) (spousal and fiancé), visas issued under section 101(a)(27)(J) (juvenile), visas issued under section 101(a)(15)(U) (U visas for victims of crime or those aiding law enforcement), visas issued under section 101(a)(27)(C) (special immigrant—minister), applications for asylum under section 208, applications for adjustment of status under section 209, and petitions for visa or status under section 201(b).

Section 4 provides authority to the Secretary of State to impose surcharges to support visa security activities.  Section 4 also amends the Homeland Security Act of 2002 to require, within four years following enactment of the bill, the assignment of DHS personnel to “each diplomatic and consular post at which visas are issued.”  The section spells out the requirements for cooperation from the Department of State to implement this requirement.

Section 5 of the bill amends section 291 of the INA concerning the burden of proof upon a petitioner or applicant for an immigration benefit.  The proposed amendment would change the current standard, “to the satisfaction of the consular officer” to the standard that each individual prove eligibility or admissibility by “clear and convincing” evidence.

Finally, Section 6 mandates a report to be conducted by the Government Accountability Office (GAO) to “review and report to Congress on the security of nonimmigrant and immigrant visa application processes.”

GT will monitor the House Judiciary Committee’s consideration of this legislation and will provide updates here in relation to the bill’s progress in the House of Representatives.

 

In the midst of the digital age, where law firms are increasingly discovering the importance of blogging in their thought leadership and branding efforts, LexBlog issued The Definitive Report on Blogging in the Am Law 200. Greenberg Traurig publishes 16 blogs, the majority of which cover legal developments important to firm clients.

LexblogThe 2015 LexBlog Am Law 200 Blog Benchmark Report ranked Greenberg Traurig’s Inside Business Immigration (www.gtlaw-insidebusinessimmigration.com) as the most visited immigration practice blog and the firm’s EB-5 Insights blog (www.eb5insights.com) was ranked No. 3. overall. Additionally, Greenberg Traurig’s Inside Business Immigration ranked No. 22 among the 962 unique blogs studied. Editors Ian Macdonald, Inside Business Immigration, and Kate Kalmykov, EB-5 Insights, are key factors in driving traffic to the blog sites and continue to bring valuable insights on immigration matters to the subscribers.

The LexBlog research team studied each Am Law 200 firm’s individual web presence and the 962 unique blogs. The blogs were catalogued into topic categories and carefully cross-referenced with their traffic rankings on Alexa.com. According to the report, LexBlog is the leader in helping lawyers and law firms build a powerful online presence through blogging and social media.

To read full press release click here.

This morning, the Securities and Exchange Commission (“SEC”) voted 4 to 1 to lift an 80-year-old ban on advertisements of private offerings. The Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) required the SEC to amend Rule 506 of Regulation D to permit general solicitation and advertising in private placements as long as all purchasers are accredited investors. The new rule will take effect 60 days after the SEC publishes it in the Federal Register. However, companies will still have to verify that securities are sold only to accredited investors.

Issuers and EB-5 projects seeking to raise capital through the sale of securities generally must either register the securities offering with the SEC or rely on an exemption from registration. Most of the exemptions from registration prohibit companies from engaging in general solicitation. The exemption from registration contained in Rule 506 of Regulation D is often used by EB-5 projects.

In an offering of securities that qualifies for the Rule 506 exemption, an EB-5 project may raise an unlimited amount of capital from an unlimited number of “accredited investors” and up to 35 non-accredited investors. For the past 80 years, issuers seeking to raise capital under Rule 506 could not advertise to the general public. With today’s rule change, issuers under Rule 506 will be able to freely advertise to any potential investors.

However, issuers still need to take reasonable steps to verify that investors are accredited. Additionally, the SEC has also voted to issue new rules containing stronger investor protections. These include requiring issuers who take advantage of the new advertisement rules to provide additional information about their securities offerings, provide more information about their investors, and, in addition to other current requirements, be required to file the Form D at least 15 calendar days before engaging in general solicitation for the offering and within 30 days of completing an offering, issuers would be required to update the information contained in the Form D and indicate that the offering has ended. The SEC also adopted rules that would disqualify felons and other bad actors from participating in Rule 506 offerings.

This will fundamentally alter the marketing landscape for EB-5 projects by allowing project companies to solicit investors through social media, press releases, newspapers, billboards and other traditional marketing campaigns. While it remains to be seen whether this will make it easier for EB-5 projects to raise money, the new rule changes will certainly allow EB-5 projects to reach more potential investors.

Prepared by: Arthur Don | Steven M. Felsenstein 

The Investment Regulation Update is a periodic publication providing key regulatory and compliance information relevant to broker-dealers, investment advisers, private funds, registered investment companies and their independent boards, commodity trading advisers, commodity pool operators, futures commission merchants, major swap participants, structured product sponsors and financial institutions.

Continue Reading GT Investment Regulation Update – April 2013