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The Chinese Supreme People's Court and the China Banking Regulatory Commission have handed down a new interpretation of Chinese law that will have a significant impact on those marketing the EB5 visa program to investors. When it comes to the selling of securities in China, there was already law on the books meant to regulate marketing activity. According to Brian Su, however, the court's latest decision was rendered specifically to clarify many existing regulations. He calls the move by China's government "extremely serious" in its implications for brokers selling securities in that country, and he believes EB5 visa practitioners should know what the new ruling may mean for their business activities. Until a full English translation is available, the details of the court's decision are not fully known. Still, Su says there are some high-level components of the decision of which we are already aware: 1. All brokers must meet licensing and registration requirements. 2. EB5 marketers will no longer be able to use "public media" television, radio, internet, etc. to promote the sale of securities. 3. Marketers will be barred from promising (or perhaps even discussing) any form of return on an investment. 4. Marketers will be unable to promote financial products to the general public. Some of those elements, in particular the last three, may be cause for alarm among some brokers promoting EB5 visa investments in China, and regional center operators should be vigilant about how their projects are presented abroad. "It is now very risky for regional centers to ignore" the activities of brokers marketing their projects in China, said Su. If investors experience massive losses on a project, "the authority will go after not only brokers, but also trace to the regional center in the U.S." Concern over the sale of securities by unscrupulous organizations transcends those transactions made between Chinese EB5 brokers and investors. During the last few years, several investment-related schemes some having to do with immigration and others not have sprung up in China. Many investors lost money, and provincial governments have become increasingly concerned. An article in China Daily dated January 5 states that "about 5,400 suspects [have been] arrested in 5,000 cases" of illegal fundraising since 2008. What's more, Chinese police "investigated 10,000 illegal fund-raising cases involving about 100 billion yuan" between 2005 and 2010. Given the prevalence of such activity, it's little wonder why the Chinese government has become concerned. "At this point, the brokers have to be very very careful about their contact with the investors," said Su. "The brokers should focus on selling the immigration side as opposed to talking too much about investment itself. Any time you are talking about the EB5 investment, you might be in violation." More news on the EB-5 program can be found here and guidance on how to properly structure an EB-5 visa offering to be in compliance with both U.S. and foreign securities laws can be found here. info.eb5info.com/bid/95540/Chinese-Court-Decision-a-Game-Changer-for-EB5-Visa-Marketers 1/4
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Tags: EB-5, EB5, EB-5 visa, EB5 visa, EB-5 Regional Centers, EB5 visa news, EB-5 Promotion, EB-5 China Post Comment Name * Email * Website (optional)
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2012 USAdvisors.org
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