BPC: Securities assignment

Michael,

You are the sub-comm. securities head and I was wondering if you could help us organize the narrowing of this list down before AILA LV? I will be available today and tomorrow and then mostly out on Thursday, Friday. We could work on this by message, chat room or cc, please let me know your thoughts.

Michael Homeier (Sub-Committee head)
Bill Bliek
Maria Heise

1. Over-selling – promising more than EB-5 can actually deliver, or mischaracterizing the program (for example, “the US government backs my project,” when in truth, the fact the gov’t may grant permission is not at all the same as endorsing);

2. Under-disclosing – not including the “cons” of EB-5 when promoting the “pros”;

3. The need to dissuade children from jumping into the industry thinking it’s a quick and simple route to easy money, leading to disappointment or failure; and

4. Last but certainly not least, a failure to live up to the legal requirements, both of the EB-5 program itself, and of the securities laws, the latter likely to be a major issue in the next few years. (To the extent mistakes happen from a lack of education, providing info, guidance, seminars, etc. should reduce the incidence of illegality due to ignorance, which I see as a major goal for IIUSA to pursue…)

5. I don’t believe RC principals and their “sourcing agents” (internet-based or otherwise) fully understand the ramifications of paying finder’s fees to entities that perform their service based in the US. My background is in investment banking and securities, and with that in mind I truly don’t believe this needs to be an issue. Rather, I think education in this area needs to be embraced rather than viewed as a hurdle to raising capital quickly. The risk to all parties involved (agents, RCs, investors, immigration attorneys) is just too great. The securities attorneys panel discussions have been very eye opening for many, however having a reference document available that is prepared by one or several securities attorneys would likely be beneficial to members.

6. Best practice answers to Agent partnership for RCs and Regional Center selection for Investors

7. I would really like to see a program for new RC or those who may be looking to form a RC, one that offers them support and information to ensure that they know rules and provides resources that helps them in the early stages.

8. Current Practices of the existing Regional Centers show non-compliance especially with Securities Law e.g. the finder’s fee being paid to non-licensed agents. The issue is how can the existing Regional Centers make the transition to lawful compliance? The question then becomes how can the Invest in the USA organization ensure its member Regional Centers comply with the Securities Laws? (i.e. to be a member of the Invest in USA group, each member Regional Center
has to be in compliance otherwise the membership will be revoked).

9. Therefore, we need to develop a strategy plan of how to educate the Regional Centers so as to comply with all Regulations.

10. I believe it is important to address the penalties for non-compliance of the Securities Laws and Immigration and Nationality EB-5 rules and regulations.

11. I would really like to see a program for new RC or those who may be looking to form a RC, one that offers them support and information to ensure that they know rules and provides resources that helps them in the early stages.

12. Let’s get some of the overseas agents on board, not only do we have to make sure they know, understand and follow the rules but we need to listen to their input regarding hot issues and concerns they face.

13. I think the investors bill of rights idea is excellent!

14. So my view of Best Practices focuses on setting up guidelines and standards, checked with measuring points (if we can be so bold), and educating people on how to do EB-5 successfully – which to me means both lawfully, and yes, ethically. These are admittedly thematic points, rather than simple points. The items or practices in EB-5 that concern me (and spurred me to wish to participate on our committee)

15. Best Practice Committee – to establish a set of standards and guidelines that protects the investors, Regional Centers, and all other participants through the investment and immigration process. The set of standards should provide transparency through the investment process, security through the immigration process, and compliance with both the immigration and
investment requirements.

16. I’m not 100% certain if our ultimate mandate is to recommend solutions to mitigate our concerns, but in the spirit of trying to identify a solution rather than just sound like a complainer, I offer examples of solutions that could possibly provide transparency to help alleviate or mitigate the concern. I don’t propose we publish a “how to” series of guidelines. I’d prefer we provide a resource for all EB-5 constituents to reference when they have concerns about how to approach procedures ethically and provide transparency to the ultimate customer – the investor.