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Should I avoid a regional center project with a waiver of jury trial in its subscription agreement?

I was reading the subscription agreement of an EB-5 regional center project and found an investor waiver on the right to a jury trial for any claims based on the investment. Is it common for a regional center to have such a clause? Should I avoid this project? If I waive my rights to a jury trial and things go south with the investment, what can I do to protect myself or request indemnity? Will other kinds of legal action help me?

Answers

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    A Olusanjo Omoniyi

    Immigration Attorney
    Answered on

    It is not unusual for a subscription agreement to have a waiver of the right to a jury trial. In such a circumstance, the agreement may provide for arbitration instead. In some cases, an argument can be made that you can pursue a bench trial as well but just not a jury trial. Furthermore, one does not need to necessarily avoid this type of project because, the recourse to litigation should not drive your investment decision. In EB-5 investments, there is no such thing as protection or warranty or indemnity against loss of investment. To the contrary, an EB-5 investment is an investment at-risk. In essence, an investor can earn profit or even lose his entire investment. Prior to signing any subscription agreement, consult an attorney to verify your legal options in the event legal action is necessary in the future.

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    Phuong Le

    Immigration Attorney
    Answered on

    If you're referring to arbitration, it may be more common (fortunately or unfortunately) then you'd expect. The more important focus, which the project should answer, is if you're waiving jury rights, then what protections and safeguards does the project have in place if things go south. Well-structured projects with professional teams should have already considered such possibilities and have prepared contingencies in place to protect you and your interests.

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    Marko Issever

    EB-5 Broker Dealer
    Answered on

    This is certainly a personal preference issue. While most investors would prefer not to waive the right to a jury trial, my personal view is that there are so many other factors that make a project desirable or not that accepting or rejecting a project solely on the basis of this clause would not be advisable.

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    Lynne Feldman

    Immigration Attorney
    Answered on

    Impossible to advise you without knowing many more facts. If the facts are complicated in a case it is often better to have a judge or arbitrator decide. Again, depends on which judge and rules for arbitration.

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    BoBi Ahn

    Immigration Attorney
    Answered on

    This is pretty common. This should not be the reason to avoid investing in the project, as long as you and your attorney have done solid due diligence on the merits of the project, the regional center performances and track record, etc.

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    Julia Roussinova

    Immigration Attorney
    Answered on

    It is not material for securities law litigation; however, hire an EB-5 immigration attorney to prepare your I-526 petition and EB-5 due-diligence professional to ensure you invest in a reputable regional center with an excellent track record and multiple successful projects behind its shoulders.

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    Stephen Berman

    Immigration Attorney
    Answered on

    That is a normal provision in many contracts. It does not suggest the investment is good or bad.

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    Vaughan de Kirby

    Immigration Attorney
    Answered on

    Yes, this is indeed common and, in many cases, serves both parties. With that said, you should have the subscription agreement carefully reviewed by your personal attorney before you sign.

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    Jinhee Wilde

    Immigration Attorney
    Answered on

    Many agreements have arbitration clauses instead of lengthy lawsuits. So, waiving jury trials may not be a disqualification for investing with that regional center. What I would look at more closely is whether the regional center is closely related/affiliated with the project developer or if they are the one and the same. The vertical integration where the regional center does not exercise independence and oversight of the project on behalf of the investors is more of a red flag than a jury trial waiver.

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    Dale Schwartz

    Immigration Attorney
    Answered on

    I would avoid it! Too one-sided.

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    Bernard P Wolfsdorf

    Immigration Attorney
    Answered on

    A jury trial versus a judge trial may not be a critical aspect if it is a complex securities matter. This is merely one small aspect. It is important to evaluate the project, who are the principals, what is the track record, what is the capital stack, i.e., how much skin does the developer have in the project? Jury trial versus judge trial is not material. If you have to do any trial, it is very bad. Try and stay out of court by choosing a good project.

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    Charles Foster

    Immigration Attorney
    Answered on

    There would be many criteria in selecting a regional center project, including whether or not there is an approval of an exemplar, any prior approvals of EB-5 investor petitions on Form I-526, the reputation of the project developer, the length of time the project developer has been in business, the protections provided to the investor, where the EB-5 investors are in the financing stack. With respect to the waiver of your right to a jury trial in conjunction with any dispute, you have to see what alternatives were provided. Typically, this might be an arbitration provision. Remember, whether or not you have a jury trial or arbitration, you would still be entitled to legal representation. Of course, the best bet would be to avoid investing in a project where you are likely to have a dispute.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    As an immigration attorney, I would defer to my corporate counsel colleagues on that. EB-5 investments are both an immigration and business decision to make.

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