FINRA Issues Guidance for Broker-Dealers on EB-5 Projects and Marketing Private Placements with EB-5 Securities

FINRA Issues Guidance for Broker-Dealers on EB-5 Projects and Marketing Private Placements with EB-5 Securities

In September 2013, FINRA released an interpretive letter giving guidance to broker dealers who are involved in securities transactions in connection with the EB-5 Program.

FINRA’s guidance has had far-reaching implications for broker-dealers engaged in the marketing of EB-5 offerings. FINRA member broker-dealers who recommend EB-5 investments are now required to perform heightened due diligence with respect to immigration matters, and to both understand and advise prospective foreign investors regarding an EB-5 offering’s compliance.

As a result of FINRA’s guidance, and in order to engage in EB-5 Securities transactions, Prevail applied to FINRA for a modification of their Continuing Membership Agreement (CMA), an application process which lasted approximately 12 months. Importantly, correspondence with FINRA, throughout the application process, provided Prevail with a comprehensive understanding of its capabilities and insight into the regulatory space for EB-5 business.