The bar is set high for regional center and project approvals.
Martin Lawler, an experienced EB-5 immigration lawyer, is up
to the task. With his sophisticated clients, he leads the team of
top economists, business plan writers, market analysts and
securities lawyers needed to help clear EB-5 hurdles.
no more than 100 investors and the C-5 Exemption
whereby the NCE is engaged in a transaction that
involves real estate collateral either directly or through
a first mezzanine pledge that could otherwise qualify as
a mortgage-backed collateral loan.
b. Broker/dealer registration. To the extent that
securities are being offered through the instrumentality
of the United States commerce or otherwise involving
“directed selling efforts” within the United States,
and assuming that transactional compensation is paid
and there is not otherwise a reliance upon an issuer
exemption, then broker-dealer registration would be
required under the Securities Act of 1934 (the “1934
Act”). Any violations of this condition could impose a
right of rescission by investors.
c. Investment advisor registration. Similar to the brokerdealer registration requirements of the 1934 Act,
there is also registered investment advisor registration
requirements under the Investment Advisers’ Act of
1940 for providing investment advice in connection
with the trading of securities, which needs to be
addressed in the offering documents.
• Set up many regional centers
• I-526 exemplars
• Hundreds of EB-5 ﬁlings
• Immigration book author
See Martin on CNBC news about EB-5 at classic.cnbc.com/id/37357190
Staﬀ ﬂuent in Mandarin, Cantonese, Spanish & French.
All services provided by or under the direction of a California licensed attorney.
Continued from page 13
7. Failure to raise entire EB-5 capital amount. What may
seem obvious, but is not necessarily always disclosed in other
offerings, is the risk factor of failing to raise the maximum
capital in the EB-5 offering, and whether the smaller EB-5
raise would still enable the project to be completed. In this
regard, it is important to describe what mechanisms are in
place to bridge the difference between the actual amount
of the EB-5 capital required and the maximum offering
amount. It should be disclosed that additional capital may
be generated by additional senior indebtedness or other
funding sources or equity and mezzanine financing, since it
is not acceptable to commence development without all the
capital stack sources identified.
8. Unique securities-law-related risks. As briefly noted
above, each EB-5 offering has unique securities related
risks that, in part, depend upon the size of the offering
and the manner in which the NCE is marketing the sale
of the securities. Generally, the following are the securities
issues that need to be addressed.
Investment Company Act of 1940. Although not
specifically highlighted, the Securities and Exchange
Commission (“SEC”) has taken the position that the
creation of an NCE to undertake the loan program
involves the Investment Company Act of 1940 (the “IC
ACT”) and potential registration thereunder. In order
to be exempt from registration, there are generally two
significant exempt ions that are undertaken; one is the
so-called C-1 Exemption which involves an offering to
Registration of securities. There are typically two
exemptions from registration of securities in offerings.
Regulation D applies to an exemption for domestic sales
and Regulation S applies to an exemption for offshore
sales. Each of these exemptions should be disclosed and
a determination should be made as to whether the EB-5
offering entails both exemptions.
In connection with all of the above, there should be clear
disclosure as to the total amount of potential compensation
paid and a description as to what parties will be sharing in such
compensation so that there is proper disclosure as required
under the 1934 Act.
Risk factor disclosures in an offering are complicated and,
as demonstrated above, not uniform in EB 5 offerings. Great
care must be taken to properly analyze the unique factors of
each EB 5 offering, with proper disclosures and independent
verifications obtained to support the factual positions taken in
Ronald R. Fieldstone
EB5 INVESTORS MAGAZINE
Ronald Fieldstone is a partner at Arnstein &
Lehr LLP’s Miami office, where he focuses
on corporate/securities and taxation law.
Mr. Fieldstone has been active in the EB-5
industry since 2009 and has
represented regional centers
and developers in over 125
projects. He is a frequent
author and lecturer on EB-5
and securities matters.