Unlicensed EB-5 Broker- Dealers Under Fire: SEC Draws a Bright Line and Enforcement Is Catching Up
AS SEC ENFORCEMENT INTENSIFIES, THE EB-5 INDUSTRY FACES A CLEAR LINE IN THE SAND: UNLICENSED“ FINDER” ACTIVITY INVOLVING U. S. INVESTORS, DIGITAL SOLICITATION, OR SUCCESS- BASED FEES IS NO LONGER TOLERATED AND THOSE IGNORING BROKER-DEALER RULES ARE INVITING INEVITABLE REGULATORY ACTION.
By Staff
The EB-5 Immigrant Investor Program is no longer a regulatory gray zone. In recent years, the U. S. Securities and Exchange Commission( SEC) has intensified its scrutiny of intermediaries operating in EB-5 securities offerings, with particular focus on unlicensed“ finders” who solicit investors and receive transactionbased compensation without proper registration.
What was once treated by some market participants as industry custom is now squarely within the SEC’ s enforcement crosshairs. The rules governing broker-dealer activity are settled, the fact patterns are well understood, and enforcement actions demonstrate a consistent message: unlicensed brokerdealer activity in EB-5 is unlawful, detectable, and increasingly punished.
This scrutiny has escalated as EB-5 offerings target individuals already residing in the United States, such as H-1B and F-1 visa holders, through digital platforms, webinars, and social media. When solicitation occurs in or from the United States, or when U. S. investors are involved, U. S. securities laws apply regardless of where the intermediary claims to be located.
WHEN A BROKER-DEALER IS REQUIRED AND WHEN IT IS NOT
Unlicensed broker-dealer activity in EB-5 is unlawful, detectable, and increasingly punished
One of the most persistent misconceptions in the EB-5 marketplace is that all intermediaries must be licensed or that none must be. Both views are wrong.
U. S. securities law draws a bright, enforceable line.
Activities That Are Lawful Without a U. S. Broker-Dealer License The following activities are generally permissible without U. S. broker-dealer registration:
• Foreign-based agents soliciting foreign investors who reside outside the United States, where all solicitation activity occurs offshore
• Overseas agencies placing non- U. S. investors from abroad into U. S. EB-5 projects
→ 42 EB5INVESTORS. COM EB5 INVESTORS MAGAZINE