EB5 Investors Magazine "Top 25 Awards Edition" Volume 8 Issue 1 | Page 96

Making Sense of the Proposed Revisions to the Finder’s Exemption in EB-5 Offerings To facilitate capital formation, SEC has proposed to substitute the finder's interpretations with a proposed exemption to the registration requirements, creating two types of finders. By Robert V. Cornish, Jr. W ithout a doubt, almost every EB-5 regional center operator, developer (or their counsel) has been presented with the conundrum of an individual unaffiliated with a broker- dealer but who has searched low and high for investors, found (or is on the verge of finding) one and cannot lawfully accept receipt of transaction-based compensation. Reflexively, many in the EB-5 industry in such instances ironically revert to Paul Anka and the questionable progeny of SEC No-Action guidance he generated. This individual who seeks compensation but has no license to do so is often the much-maligned “finder” under state and federal securities laws. Even the issuer to whom the 96 EB5 INVESTORS MAGAZINE finder may answer may besmirch that finder’s business repute. This is often so after an issuer calculates the time and money in dealing with such issues as a wash against what the finder brought to them. WHAT SEC’S PROPOSAL MEANS IN THE EB-5 FIELD In November 2020, the SEC proposed to substitute the patchwork of finder’s interpretations with a proposed exemption to the registration requirements of Section 15(a)