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Their registrations will be personal to them and therefore not an asset of a
regional center or project sponsor that employs such person. Obtaining
a registered representative license is, however, significantly easier than
registering as a broker-dealer, and this alternative may be attractive to
individuals who intend to play a repeated role in EB-5 capital-raising
and receive compensation based on the success of fundraising.
4. Hire a broker-dealer: For many in the EB-5 industry, this will be the
most attractive option. Just as a company that wants to go public
will retain a broker-dealer to underwrite the IPO, EB-5 issuers
can retain a broker-dealer to assist in raising EB-5 funds.
Until recently, there were few, if any, broker-dealer firms conducting business
in the EB-5 space. However, there are now broker-dealer firms offering to
provide fundraising services to regional centers and project sponsors looking
to raise EB-5 capital. The cost to hire a licensed firm is often less than the
commissions that are routinely paid to the unlicensed marketing agents raising
money for the majority of EB-5 projects. This is, in part, because the fees
that can be charged by a registered broker-dealer are limited by FINRA.
What is Involved in Hiring a Broker-Dealer?
A broker-dealer typically performs an initial evaluation of the sponsor and the project
before accepting the engagement. During the initial evaluation, the broker-dealer studies
the project’s business plan and reviews the experience and qualifications of the management team. The broker-dealer will typically work closely with the corporate/securities
attorneys for the project to perform initial due diligence and assess the likelihood of
success. By working together, the law firm and the broker-dealer can avoid unnecessary