Recently, the North American Securities Administrators Association (NASAA), which is the oldest international organization devoted to investor protection, published an investor advisory for potential investors in EB-5 projects. In the United States, NASAA is the voice of state securities agencies responsible for efficient capital formation and grass-roots investor protection. Their fundamental mission is protecting consumers who purchase securities or investment advice, and their jurisdiction extends to a wide variety of issuers and intermediaries who offer and sell securities to the public.
EB-5 is now becoming more relevant to NASAA.
The investor alert makes several strong points about red flags that should cause investors to look carefully at a deal before making an investment. One of the classic warning signs in EB-5 deals or really any investment is a promoter minimizing or understating risk. The alert also raises the importance of investors conducting due diligence of a project and its sponsors before committing funds.
Vermont’s Blue Sky and EB-5
While the alert is an interesting read for prospective EB-5 investors and their advisors, NASAA should have taken a closer look at what the state of Vermont is doing to break new ground in EB-5 investor protection. State securities regulators (often termed “blue sky regulators”) are leading the charge and are very involved with the EB-5 Program in Vermont, which is at this time the only state in the country that has its securities agency overseeing directly an EB-5 regional center. Specifically, the Vermont Regional Center, which is state owned and controlled, is now under the direct oversight of the Department of Financial Regulation.
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