How do I navigate rule 506?

This question is governed by securities law. Please contact a securities attorney for proper legal advice.

You should contact a securities attorney to advise you on these matters. Immigration attorneys should not be giving such legal advice pertaining to securities law. There are securities attorneys listed on the eb5investors.com website.

This is not a new requirement per se. There was a limited exemption for an unaccredited investors. I do not believe that this will be a huge barrier.

Yes, for certain 506 offerings, Obama''s JOBS act lifts the general prohibition against advertising and solicitation provided ALL subscribers to the offering are "accredited investors". This could significantly benefit eb5 offerings since the program''s substantial minimum investment of .5/1M makes the pool of targeted offerees almost exclusively "accredited". Rule 501 defines an investor an "accredited investor" as one whose: (i) net worth exceeds $1M excluding their primary residence, or (ii) annual income exceeds $200k for the last two years ($300k if including joint income of a spouse). The concept dates back to the 80''s when Reg. D was enacted and is generally used to limit the number of unsophisticated investors for certain "safe harbor" and rule exemption offerings under 504, 505 and pre-existing 506. New Regulations promulgated last month (July 2013) pursuant to the JOBS act, however, ominously add that issuers must "take reasonable steps" to ensure that investor are in fact "accredited". Prior to this language, it has been the practice among securities attorneys to simply append a statement to the subscription agreement requiring the investor to certify that he/she meets the criteria of an "accredited investor". The questions is whether this standard practice will be sufficient under the new regulations. While we await additional guidance, the Commission has responded to posted comments by providing a non-exclusive list of methods of satisfying this requirement. Among the enumerated methods are: subscriber confirmation, examination of tax returns and obtaining a statement by an attorney/licensed dealer brokerbrokers/cpa that reasonable steps have been take to ensure "accredited" status. This is a new area of law. We are monitoring developments as they occur and welcome inquiry concerning the latest pronouncements.

As an attorney that practices US Immigration law exclusively, I do know that most, if not all, Regional Centers require investors to complete accredited investor questionnaires to comply with SEC Regulations, which include net worth requirements. Retaining qualified EB5 counsel, like the attorneys at our law firm, can help investors and project principals coordinate with other professionals to navigate the issues that may arise, and develop approvable strategies.

In answer to your question the answer is yes and no. You pose questions which require the legal advise of an experienced EB-5 securities attorney. You will have to understand the parameters of general solicitation, Reg D and Reg S exemptions.

We wrote an extensive blog article on this topic. You will note from that blog article: - there is an alternate exemption under Regulation S, though care is required in using it given its own restrictions and given state law matters - there is an income-based test for accreditation that does not require any showing about net worth - the SEC provided some non-exclusive examples of how to verify income, but other procedures are possible and must be evaluated using criteria set forth in the release and described in the blog article.

The vast majority of my EB5 clients have a net worth of well over US$1 million, so I do not foresee this as a significant obstacle. Since this is a new provision, we do not yet know what elements and level of proof will be accepted by CIS.