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Regulation and Compliance > Federal Regulation > SEC

SEC, NASAA Share Guidance on Opportunity Zone Funds

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The Securities and Exchange Commission and the North American Securities Administrators Association issued a joint summary Monday explaining the compliance implications for qualified opportunity funds under federal and state securities laws.

The “opportunity zone” program was established by the Tax Cuts and Jobs Act in December 2017 to provide tax incentives for long-term investing in designated economically distressed communities.

The SEC also released staff guidance on the ability of Main Street investors to participate in such offerings.

“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,” said SEC Chairman Jay Clayton.

The summary explains the opportunity zone program and when interests in qualified opportunity funds would be securities under federal and state securities laws.

It also provides an overview of the SEC and state requirements relating to qualified opportunity funds and their securities offerings, broker-dealer registration and considerations for advisors to a qualified opportunity fund.

For instance, because QOFs typically are pooled investment vehicles through which investors contribute funds to invest in qualified opportunity zones, “depending on the facts and circumstances, these investment vehicles may have to register as investment companies under the Investment Company Act,” the guidance explains.

Michael Pieciak, NASAA president and Vermont’s Commissioner of Financial Regulation, added that the 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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