Rules and Regulations

EB-5 Rules | The Immigrant Investor Program

Invest $500,000 and employ 10 U.S. workers in an economically disadvantaged community in order that one may secure an immigrant visa which can lead to a permanent green card after a 2 year conditional period. Could it really be that simple?


Sure, why not. The EB-5 program encourages immigrant investors to improve economic conditions in rural and economically challenged areas, providing a benefit for everyone. Further, the investor may be able to bypass the 2-year conditional period when they invest in designated towns populated by 20,000 people or less. An investor’s immediate family members may also enjoy the benefits of joining the investor to live and work in the United States right away.

So, how do broker-dealers get involved in the transaction? By selling EB-5 securities, of course.

Securities laws have a huge impact on how EB-5 program securities offers are structured. The term “Security” as broadly defined by the SEC; where an investment is a “security” if the investor’s money is put at risk in a project whose success depends on the efforts of others. Once an investment is deemed a “security”, the 1933 Securities Act takes effect and requires the sales be registered with the SEC, unless it is exempt.

Broker-dealers engaged in marketing EB-5 securities are required to follow stricter due diligence analysis where immigration matters are concerned. In August 2013, FINRA released a guidance letter stating, “A broker-dealer also should analyze whether the private placement is consistent with the requirements of the EB-5 Program, such as whether it constitutes an investment in a domestic project that will create or preserve at least 10 jobs for U.S. workers.”. In addition, BD’s must perform traditional investment due diligence.

Regional Centers and Exemptions

In 1992, Congress established the designation of Regional Centers. The purpose was to pool EB-5 capital from multiple foreign investors toward USCIS-approved economic development projects. The projects are located in defined geographic regions as designated by USCIS (United States Citizenship and Immigration Services) and are called Regional Centers. There are several steps involved in becoming a Regional Center, including filing a Form I-924 application.

Securities sold to fund EB-5 projects may be handled through an approved broker-dealer or may qualify for an exemption status. With regards to exemption status, securities that qualify for an exemption allow issuers to raise capital for the investment project without registration as a broker-dealer.

Exemption Status | Regulations S and D

Regulation S “Foreign Offerings”

Regulation S allows an exemption for a broker-dealer provided there are no sales efforts of securities inside the US that are directed to non-US persons.

Regulation D “Private Placements”

Regulation D allows the Regional Center to conduct private placements for raising capital from foreign investors and general solicitations, but the securities can be sold only to accredited investors.

In recent years, the USCIS and SEC have been working together to raise awareness and alert investors of fraudulent foreign investments. The laws are highly complex and broker-dealers as well as Regional Centers find themselves under investigation regarding EB-5 transactions quite often.  Partnering with an experienced compliance firm who understands the complexities of EB-5 securities is essential to success of the project and fundraising activities.


RND Resources, Inc. has experience helping brokers become established to handle EB-5 projects. Our expert consultants are able to oversee compliance management and risk assessment for foreign investment offers and Regional Centers. Navigate the EB-5 program landscape and maintain regulatory compliance with confidence while letting us take the guess work out of federal immigration laws as well as federal and state securities laws. By providing a full suite of services we can handle the necessary registration, compliance, and exemptions work. Contact us for a quote based on your needs.

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