Puerto Rico Could Be Forced Under SEC Jurisdiction

Zero Hedge

Submitted by Simon Black of Sovereign Man

What happened:

Puerto Rico has long been a safe haven for businesses and investors weary of the Securities and Exchange Commission. Despite the fact that Puerto Rico’s public sector is going through bankruptcy, the private sector has enjoyed relative freedom from the intrusive hands of the U.S. government.

That will change if a bill making its way through Congress becomes law.

Companies formed in Puerto Rico (and other U.S. territories) have always been exempted from the Investment Company Act of 1940 if they only offer investments inside the territory. This means the SEC doesn’t have a say in how investment funds are structured and managed.

But the U.S. Territories Investor Protection Act of 2017 will end the exemption. The act has passed the house and is now being debated in the Senate.

The bill will give the SEC jurisdiction over Puerto Rico and other U.S. territories. The supposed purpose is to prevent companies from making risky investments, or defrauding their investors.

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