The US EB-5 Investor program grants foreign nationals a US green card in return for a US$500,000 or US$1 million investment in a Regional Center or new business respectively, that will create a minimum of 10 new jobs for qualifying Americans. There are numerous advantages to obtaining a green card through the EB-5 program:
* Applicants can live anywhere in the USA
* Applicants can travel in and out of the USA
* Applicants receive work authorization to work in the USA
* Applicants’ children can study in the USA
As the investors’ funds are at risk and it is a sizeable investment amount, strict laws exist to protect the investors and their investments. The laws in place are administered by the U.S. Securities and Exchange Commission (SEC). This government organization regulates the U.S. markets in order to protect investors from fraud.
Foreign nationals with a high net worth are turning to the EB-5 program in increasing numbers as a simple way to immigrate to the US and establish a brighter future for themselves and their immediate family members. The SEC’s role has thus become more important than ever. The growing numbers of EB-5 applicants has led the SEC to put more focus on this program to protect foreign investors. Most EB-5 investments are made through securities and, unlike government guaranteed deposits, can lose value. In fact, Regional Centers are not allowed to guarantee return on an investment into their business. There are no guarantees, however, conducting proper research and due diligence is the best way to protect an investment. Finding a Regional Center that has a proven and successful track record is key to reducing and almost eliminating the investment risk.
Regional Centers are required to prepare and disclose a Private Placement Memorandum (PPM) which clearly outlines the investment terms as well as the risks relevant to a specific project that the EB-5 applicant is investing in. All applicants are allowed access to this information in order to make an informed decision. The disclosure of risks helps with the transparency of capital markets which is vital to investors who are investing their funds as a means to immigrate to the US.
In order to ensure that capital markets remain transparent, the SEC works closely with all involved parties, most importantly the investors. If and when the SEC receives a complaint from an investor concerning a Regional Center, whether it be a question of fund return or non-disclosure, the SEC may start an investigation. An investigation involves overseeing the parties involved in the securities investment, including the brokers, advisors, and the Regional Center. The SEC’s biggest concern and priority is to protect the investor from fraud. In the event that a fraudulent case is discovered, the SEC can freeze the assets of the Regional Center in an attempt to return the funds to the relevant investors. If a Regional Center is entirely shut down, so to are the immigration applications of the investors in question, but the SEC does their best to work with the investors to complete the project invested in and protect their funds.
With recent cases of fraud in the EB-5 world, the SEC is making protection of investors and regulating Regional Centers a top priority this year. The end result will hopefully be to deter future cases of fraud and to increase investor confidence in the EB-5 program.
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