SEC, NASAA release summary of opportunity zone compliance issues


A summary explaining federal and state securities laws relating opportunity zone investments was released by the Securities and Exchange Commission and the North American Securities Administrators Association (NASAA).

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The opportunity zone program — established by the Tax Cuts and Jobs Act – was created to provide tax incentives for investing in economically distressed communities. The summary will help participants understand the compliance implications.

“The opportunity zone program has the potential to encourage investment and economic development in many areas across the country that are in need of capital. The staff statement released today will help market participants understand securities laws implications when seeking to raise capital for opportunity zones,” SEC Chairman Jay Clayton said. “In addition, today the SEC is issuing staff guidance regarding the ability of Main Street investors to participate in these offerings.”

Specifically, the summary discusses when interests in qualified opportunity funds would be securities under federal and state securities laws. It also recaps SEC and state requirements for opportunity funds, including their securities offerings, broker-dealer registration, and considerations for advisers.

“This new program provides an opportunity to strengthen investments in low-income communities and rural areas that traditionally struggled to attract the capital necessary to spur economic growth and job creation,” Michael Pieciak, president of NASAA and Vermont’s commissioner of financial regulation, said. “This joint summary is a good example of state and federal regulators working collaboratively to address new compliance issues raised by an innovative program and thereby promoting our dual mission of protecting investors and helping facilitate capital formation.”

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