What are the implications of a SEC investigation of an EB-5 regional center for its projects?

It could delay processing of I-526 or I-829 petitions. Your attorney should be able to assist you with options and strategies.

SEC may have many reasons for investigating an EB-5 Regional Center project (i.e., how the investors were solicited, fraud, etc.) and, without specifics/detailed information, it would be difficult to provide how such investigation would affect investors.

Your questions are timely and important. First, what are the reasons for the SEC to investigate a regional center and how it can affect the investors? There are many factors that prompt the SEC to investigate sponsors of investments such as Regional Centers. The SEC has to seek internal approval to commence an investigation, which is usually started by a subpoena to a firm for information on the investments at issue and the lists of the investors. The SEC is also prompted in many cases through tips and referrals, as well as through its own investigatory efforts. USCIS and the SEC have cooperated in the past by sharing basic information, such as the identification of Regional Centers and their operators. Whatever the case, an investigation does not necessarily mean that something is wrong, as the SEC often performs "sweeps" for information throughout the subpoena process. An investigation can affect investors, of course, if there is fraud or wrongdoing found and the SEC has to freeze assets. On the other hand, if the SEC ascertains who the investors are, those investors may be questioned, subpoenaed or formally deposed. If law enforcement (DOJ) is involved, much of the dynamic changes given the potential for leveling of criminal charges against wrongdoers. Second, what happens to EB-5 projects if their regional center is investigated by the SEC? An investigation should not affect how a project of the Regional Center moves forward. If the SEC moves forward and proceeds with action against the Regional Center, assets may be frozen and a receiver put in place to manage the enterprise. The receiver can and should take steps to make sure the project proceeds in some manner to generate the intended immigration benefits, but financial factors may prevent this from happening. One thing to note: if a project is frozen for fraud issues, you could maintain your priority in processing if you invest into another project. You may have to take legal action on your own if an investigation is proceeding and no freeze is in place with a failing project, as the SEC does not always act affirmatively on cases it investigates.

If the SEC is investigating an EB-5 Regional Center project, the implications are clear. It means the SEC has some reasonable basis to believe the Regional Center, the job-creating entity, or parties connected therewith have violated one or more United States securities laws, regulations, or policies. It would not necessarily mean that the project itself will not meet the legal requirements under U.S. immigration laws, nor that it is a bad or risky investment. The SEC investigation could merely be a technical investigation involving SEC violations, such as solicitations that were not SEC compliant, or it could potentially be a very serious investigation concerning fraud or corruption.

There are many different reasons for an investigation, including fraud. The ramifications for the investor are therefore varied.

A SEC investigation may or may not affect your application, depending on the reason for the investigation. This is a question you should immediately ask your immigration attorney.