Tips for Protecting Your EB-5 Investment: U.S. Securities Act

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How to protect your EB5 investment?

As an investor from a foreign country, understanding the legalities of the investment process within the U.S. is vitally important. One such area that is important to any foreign investor, especially those within the EB-5 program that is investing in a business that they are not in direct control of, is the U.S. Securities Act. Each company in the EB-5 regional center program that is designated as a Limited liability company (LLC) or Limited Partnership (LP) offers “security” to the EB-5 investor who then becomes a limited partner or member. Due to the fact that the regional centers are conducting the offering of such securities, the regional center is required to comply with federal and state laws. The main law is the U.S. Securities Act of 1933.

 The U.S. Securities Act of 1933 essentially has two main goals:

1)      require that investors receive financial and other significant information concerning securities being offered for public sale; and

2)      prohibit deceit, misrepresentations, and other fraud in the sale of securities.

Understanding your rights as an investor to accurate and complete financial information is a major step within the EB-5 process. Most companies involved with the EB-5 program are registered with the U.S. Securities and Exchange Commission. The purpose of this registration is to allow investors to make an informed decision about their investment by being able to look:

  1. a description of the security to be offered for sale;
  2. information about the management of the company; and
  3. financial statements certified by independent accountants.

As an investor of $500,000 USD to $1 million USD or more, it is important that you understand the complete financial picture of the organization, before investing in the company. Please note that the burden falls on the investor, not the company or regional center program, to make the right choice concerning their investment. By understanding the full financial risks, you can save yourself from failing prey to fraudulent or unsafe investment conditions or losing the monies that you have invested into the program. Remember that the success of the permanent green card status rests on the success of the investment. In addition, there are certain rights and protections that are afforded to an investor. These rights can be found on the U.S. Securities and Commissions (SEC) Website at: http://www.sec.gov/about/laws.shtml. If you are interested in finding the financial information for a company registered with the SEC, please go to http://www.sec.gov/edgar/quickedgar.htm#.U-rBeFZN1uY to find their information.

Click here to learn more about EB5 Green Card. 

As always, please feel free to check out our other blog posts regarding the EB-5 visa process at www.immigrationbiz.com

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