Often, investors expect guidance from their legal counsel in the process of reviewing EB-5 projects and picking a suitable option. Yet most immigration attorneys do not possess the in-depth financial expertise required to evaluate the viability of potential investment opportunities.
Since project selection is a key component in the EB-5 process, engaging Financial Industry Regulatory Authority (FINRA) registered representatives (a.k.a. investment brokers/financial consultants) can significantly smoothen this path for investors.
A decade ago, it was nearly impossible to find FINRA-registered representatives who specialized in working with EB-5 projects. Today, such professionals exist to the benefit of investors and their immigration counsel.
This article explores compelling reasons why immigration attorneys should recommend the services of a FINRA-registered representative to help their clients select an EB-5 investment project.
Understanding the role of FINRA registered representatives
FINRA-registered representatives are professionals qualified and overseen by the Financial Industry Regulatory Authority (FINRA), a non-governmental organization that regulates member brokerage firms and exchange markets. They possess an extensive understanding of financial markets, investment products, and regulatory compliance. These representatives can offer invaluable insights into the selection of viable and compliant projects for EB-5 investment.
Reasons for recommending FINRA registered representatives
Expertise in financial evaluation & compliance:
FINRA-registered representatives possess a deep understanding of financial instruments and markets. Their expertise enables them to efficiently evaluate the viability and potential of various projects. FINRA reps advise potential investors to select projects that align with their financial goals and risk tolerance and are compliant with both immigration and financial regulations.
Due diligence:
EB-5 due diligence is fundamental in safeguarding investors’ capital. FINRA professionals conduct their own independent due diligence on each project before presenting the options to investors. They conduct analysis of investment opportunities, scrutinizing project feasibility, developer credibility, and market conditions, thus providing extra layers of protection to the EB-5 investors.
Reduced liability for immigration attorneys:
Liability from both an insurance standpoint and malpractice can become an issue if an immigration attorney takes on the role of reviewing EB-5 projects or simply recommends Regional Centers without providing further guidance to the client. Professional liability may arise from incorrect or incomplete advice. Furthermore, malpractice insurance for immigration attorneys does not allow activities outside of the practices listed in the insurance application, such as review and analysis of investment options. Referring the client to a licensed professional, such as a FINRA broker is a prudent step to avoid liability when working with an EB-5 investor.
Ethical advice:
Being regulated professionals, FINRA-registered representatives are bound by a set of ethical standards and compliance guidelines. They can be held liable for providing incomplete or misleading information.
Project advice from experts in the industry:
With their wealth of knowledge of investment practices as well as the EB-5 industry and Regional Center reputations, these representatives can empower investors to make informed decisions. They provide objective, data-driven advice, assisting investors in understanding the implications and potential outcomes of their investment choices.
The RIA mandates use of registered project advisors:
Investor’s I-526 petitions can be denied if they use an unregistered representative or a foreign agent to place their investment.
The EB-5 Reform and Integrity Act of 2022 (RIA) requires an I-956K registration from all project promoters (whether they are U.S.-based FINRA reps or foreign agents). When investors are not familiar with the accessibility of FINRA-regulated representatives and attempt an independent search for EB-5 projects online, they may unknowingly utilize an unlicensed promoter’s website or business to access project information.
That agent may receive compensation for placing the investor, which will be reported to USCIS by the Regional Center. If the agent does not have a valid I-956K registration with USCIS, the investor’s petition may be denied. Recommending to retain a FINRA-regulated investment professional can provide comfort that investors meet the RIA promoter requirement.
No additional cost to the investors:
Most FINRA-registered representatives do not charge investors a fee for their services. Nearly all EB-5 projects have agent and broker compensation already budgeted into the offerings; the agents are compensated by the Regional Center after the investment is placed. An investor can avail himself of the benefits of expert financial consultants and independent due diligence without any additional expenses.
When should FINRA representatives be retained?
FINRA reps should be introduced to the client at the beginning of the process so that the investor can work in parallel on sourcing documents for their immigration attorneys and selecting a suitable investment option.
Standard practice to facilitate successful EB-5 applications
For immigration attorneys committed to offering their clients comprehensive and diligent support, recommending FINRA-registered representatives should be a standard practice in the EB-5 application process. The involvement of FINRA-registered representatives can significantly enhance the probability of a successful EB-5 application. By recommending these professionals, immigration attorneys not only safeguard the interests of their clients but also reduce professional liability to their firm.
DISCLAIMER: The views expressed in this article are solely the views of the author and do not necessarily represent the views of the publisher, its employees. or its affiliates. The information found on this website is intended to be general information; it is not legal or financial advice. Specific legal or financial advice can only be given by a licensed professional with full knowledge of all the facts and circumstances of your particular situation. You should seek consultation with legal, immigration, and financial experts prior to participating in the EB-5 program Posting a question on this website does not create an attorney-client relationship. All questions you post will be available to the public; do not include confidential information in your question.
