•
ensuring that the regional centers conduct the
same due diligence in the reinvestment process
as the original structuring of the transaction to
prevent the reinvestment diluting the collateral
backing the EB-5 after redeployment.
The investors would then feel much more protected.
When a regional center seeks consent from the investors,
those investors could get an unbiased opinion from the
broker-dealers on the redeployment strategy.
disclose the salient risk characteristics outlined in the
offering documents of the projects they market. From
a redeployment point of view, broker-dealers can act as
the unbiased third-party verification agent that ensures
that the NCE’s follow the rules outlined in the offering
memorandums. Overall, their presence in the process
adds value to both the investors and the regional centers.
All players have a lot to gain from their active involvement
and participation.
HOW CAN BROKER-DEALERS PROTECT
NCE’S FROM LITIGATION RISK?
Broker-dealers could help regional centers in the deal
structuring and the redeployment phases by employing
best practices. In the deal-structuring, broker-dealers
could recommend them a redeployment strategy that
is fair, equitable, and appealing to EB-5 investors. With
a sound redeployment strategy, their offering would
undoubtedly become more competitive and successful.
As impar tial third par ties , broke r- deale rs , c omfor t
investors that their reinvestment options are compliant
with the criteria outlined in the offering documents. The
presence of broker-dealers grossly reduces litigation risk
resulting from the unforeseen losses due to reinvested
funds. 22
Let’s hope that the EB -5 program, now scheduled to
expire by June 30, 2021, will be reauthorized. Unlike in
the previous years, the program is no longer part of the
omnibus budget bill. In December 2020, when congress
passed a $900 billion COVID-relief package and a $1.4
trillion government funding package, they secured federal
agency operations through September 2021. 23 However,
this time, they left the EB-5 outside this extension. The
repercussion of an expired program for EB-5 applicants
bet ween now and June 2021 is significant. Broker-
dealers could explain this risk to them and shield all the
EB-5 stakeholders such as regional centers, NCE’s, JCE’s,
developers, to name a few, from costly litigation due to
nondisclosure.
Investors invest in the projects at different times during
the subscription period. Their exit dates depend on
several factors, including retrogression considerations.
T he re gional c e n te r s should have suf f ic ie n t fu nds
to return capital on a timely basis to investors from
countries experiencing no retrogression. They should
also have redeployment options for the others who need
to stay invested. While the NCE’s perform this portfolio
management function, having the advice and verification
service of independent broker-dealers is crucial. 24
B r o ke r - d e a l e r s a r e n o t g l o r i f i e d m i g r a ti o n a g e n t s
w h o d i r e c t i nve s to r s to p r o j e c t s a c c o r d i n g to t h e
compensation they receive. On the contrary, they have
to present alternative vet ted investment options to
clients, among projects for which they have conducted
rigorous due diligence. They are responsible to fully
104
EB5 INVESTORS MAGAZINE
Marko Issever is the founder and Chief
Executive Officer of America EB5 Visa, a firm
that connects international investors with
EB-5 issuers. Issever leads the firm’s EB-5
capital-related activities at the Riverside
Management Group. He recently launched
CBP Invest that promotes second country
citizenship services for E-2 visa-seeking non-
treaty nationals. Previously, Issever was a
managing director at BNY Mellon, leading
the firm’s financial institutions derivative
sales business globally. Issever earned his Master’s in Business
Administration in finance from The Wharton School of the University
of Pennsylvania. He is a graduate of Bogazici University and Robert
College in Istanbul.
Sources:
1
https://iiusa.org/blog/wp-content/uploads/2019/07/A-Broker-Dealer-Perspective-on-How-EB-5-
Issuers-Can-Safely-and-Effectively-Work-with-Sales-Intermediaries.pdf
2
https://therealdeal.com/issues_articles/eb-5s-gatekeepers/
https://www.theatlantic.com/business/archive/2015/09/should-congress-let-wealthy-foreigners-
buy-citizenship/406432/
3
4
https://www.eb5daily.com/2019/11/fy-2019-top-countries-of-eb-5-number-use-more/
https://medium.com/henley-partners/the-changing-face-of-the-eb-5-how-emerging-markets-are-
the-new-driving-force-94d7b10619e0
5
6
https://www.sec.gov/news/press-release/2018-253
https://www.finra.org/rules-guidance/guidance/reports/2018-report-exam-findings/reasonable-
diligence-private-placements
7
8
https://www.uscis.gov/policy-manual/volume-6-part-g-chapter-5#footnote-4
https://www.uscis.gov/policy-manual/volume-6-part-g-chapter-2#footnote-34
10
https://www.uscis.gov/policy-manual/volume-6-part-g-chapter-2#footnote-36
11
https://www.uscis.gov/policy-manual/volume-6-part-g-chapter-2#footnote-37
12
https://www.uscis.gov/policy-manual/volume-6-part-g-chapter-2#footnote-38
13
https://www.uscis.gov/policy-manual/volume-6-part-g-chapter-2#footnote-39
14
https://www.uscis.gov/policy-manual/volume-6-part-g-chapter-2#footnote-40
15
https://www.uscis.gov/policy-manual/volume-6-part-g-chapter-2#footnote-41
16
https://www.sec.gov/smallbusiness/exemptofferings
17
https://fas.org/sgp/crs/misc/IF11256.pdf
18
https://www.uscis.gov/policy-manual/volume-6-part-g-chapter-2
19
https://www.lexology.com/library/detail.aspx?g=fc5371da-be22-4b33-bb69-461001b39415
20
https://www.uscis.gov/eb-5
21
https://www.federalregister.gov/documents/2019/07/24/2019-15000/eb-5-immigrant-investor-
program-modernization
9
22
https://www.mintz.com/insights-center/viewpoints/2841/2018-02-limiting-securities-litigation-
risks-eb-5-offerings-what
23
https://www.eb5investors.com/magazine/article/redeployment-lessons-learned-how-to-protect-
eb-5-investors-and-reduce-litigation-risks-to-eb-5-sponsors
24
https://www.eb5investors.com/magazine/article/redeployment-lessons-learned-how-to-protect-
eb-5-investors-and-reduce-litigation-risks-to-eb-5-sponsors