EB5 Investors Magazine English Edition Volume 6, Issue 2 | Page 48

TOP CORPORATE AT TORNEYS ANDREW KINGSTON KINGSTON PETERSEN, PLLC | PRINCIPAL Andrew Kingston is a principal with Kingston Petersen, PLLC. Andrew has acted as EB-5 securities and corporate counsel since 2009. He served as general counsel to private and publicly traded companies, and was a founding partner of NNDKP, one of the largest law firms in southeastern Europe. He taught corporate finance in emerging markets at Cornell Law School and was law clerk to Harold M. Fong, Jr., chief judge of the U.S. District Court in Hawaii. He received his B.A. from University of Virginia and his J.D. from Harvard Law School. He is a member of the Washington State Bar. WHAT TRENDS ARE YOU SEEING IN THE EB-5 INDUSTRY? This was the year the plaintiffs’ bar finally discovered EB-5. Investor lawsuits have put further pressure on sponsors that played fast and loose with their fiduciary duties and the federal securities laws. However, plaintiffs’ lawyers are often unable to distinguish legitimate projects that were economically unsuccessful from fraudulent projects that broke the law. They will get better at this. Meanwhile, sponsors of legitimate projects are learning that a robust investor communications program, both during and after construction, can reduce investor misunderstanding, anger and frustration — the breeding ground of lawsuits. HOW ARE YOU HANDLING THE ISSUE OF REDEPLOYMENT? We generally handle redeployment as a matter to be decided by super-majority investor consent, not by the NCE managers. This reduces opportunities for self-dealing and gives investors a say in what happens to their money. It also protects the NCE managers, most of whom are not registered investment advisers and therefore not licensed to make redeployment decisions with other people’s money. Some NCE operating agreements now allow individual investors to decide how to redeploy their capital contributions, though this is not yet a widespread practice. JOR LAW LEXCUITY PC | ATTORNEY Jor Law is a corporate and securities attorney with Lexcuit y PC. Prior, he also founde d the EB - 5 prac tic e for Homeier Law PC, which has represented clients on hundreds of EB-5 projects that have raised billions of dollars. Law is always on the cutting edge of alternative finance and trends that impact EB-5. He worked on regional center deals and the loan model before they were popular, and he focused on smaller, non- regional center deals before they picked up interest again in recent years. He was among the first to look at integrating Opportunity Zone funds, crowdfunding and the blockchain with EB-5 transactions. WHAT TRENDS ARE YOU SEEING IN THE EB-5 INDUSTRY? EB-5 has been forced to diversify into more countries as retrogression impacts the appetite of investors from certain countries. Successful issuers are not just diversifying where they market, but also how they market. They are implementing crowdfunding techniques, investing the 48 EB5 INVESTORS M AGAZINE benefits of tokenization, and looking at alternative sources of capital such as Opportunity Zone funds to supplement their EB-5 capital raises. HOW ARE YOU HANDLING THE ISSUE OF REDEPLOYMENT? Redeployment is contemplated both at the time of the initial offering as well as at the time redeployment becomes necessary. It's important to draft flexibility yet certainty into the original documents to give EB-5 issuers clear rights to redeploy while comforting investors as to how their capital might be redeployed. The language should cover existing EB-5 regulations but have the flexibility to accommodate anticipated changes to EB-5 regulations. Engaging appropriate third parties to assist with the redeployment might be advisable for those who wish to minimize liability.