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William B. Mack is a co-chair of the Financial Regulatory and Compliance Practice. 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 foreign broker-dealers, social media, use of foreign finders, anti-money laundering rules, alternative trading systems (ATS), exchanges, and market making issues. He also provides regulatory guidance to investment banking clients in connection with securities offerings and related trading issues.

 

Use of EB-5 as part of the capital stack for an EB-5 project is a highly complicated prospect. Identifying the right Regional Center or forming a Regional Center and structuring the project so that it is compliant with the myriad of USCIS/DHS rules is a daunting endeavor.

The other very real concern for these projects is how to actually find the investors and fill the EB-5 raise. Most of the EB-5 investors come from China, but other countries are beginning to also see their citizens apply for the U.S. EB-5 program.

How does a project successfully source EB-5 investors? This is something that really needs to be considered before diving into the EB-5 world and has been the topic of numerous articles and blogs (visit Greenberg Traurig’s EB-5 insights blog). Businesses need to beware of resorting to “finders” to help locate investors. Except in very limited circumstances, paying a commission or “success fee” to a finder that is not registered as a broker-dealer violates federal and state securities laws. A company that hires a finder, as well as the company’s directors, officers, and owners, can be liable to investors and sanctioned by regulators for such violations.

This article focuses on the potential pitfalls in sourcing investors from immigration and other attorneys or consultants that are not properly registered.


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Section 15(b) of the Securities Exchange Act of 1934 (the Act) requires registration of any broker-dealer effecting securities transactions by means of interstate commerce unless an appropriate exemption is available. In order to register as a broker-dealer in the United States, an application for registration—called Form BD—must be made to the SEC and a self-regulatory organization (SRO), which, in most instances, will be the Financial Industry Regulatory Authority (FINRA).

Form BD asks questions about the background of the broker-dealer and its principals, controlling persons, employees, affiliates, parent entities and subsidiaries. The broker-dealer must meet the statutory requirements to engage in a business that involves high professional standards, and quite often includes the more rigorous responsibilities of a fiduciary. Form BD is filed on FINRA’s Central Registration Database, an online system designed by FINRA and the state regulators to centralize broker-dealer registration. Once filed, the SEC has 45 days to issue an order granting registration or institute a proceeding to determine whether registration should be denied. The SEC does not charge a fee for filing Form BD.


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The Financial Industry Regulatory Authority, Inc. (FINRA) regulates member brokerage firms and exchange markets in the United States.

FINRA is a not-for-profit non-governmental organization that acts as a self-regulatory organization (SRO). SROs were created by the Securities Exchange Act of 1934 to enforce certain industry standards and requirements related to securities trading and brokerage. FINRA is subject to the oversight of the Securities and Exchange Commission (SEC).

FINRA licenses individuals and admits firms to the industry, writes rules to govern their behavior, examines them for regulatory compliance, and disciplines registered representatives and member firms that fail to comply with federal securities laws and FINRA’s rules and regulations. FINRA maintains the Central Registration Depository, a database of all registered individuals and firms. In addition, FINRA provides education and qualification examinations for securities industry professionals.


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