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.
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
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)