You are here[HOT] According to an AILA Memo, EB-5 Finder's Fees are NOT worth the Risk

[HOT] According to an AILA Memo, EB-5 Finder's Fees are NOT worth the Risk


By eb5attorney - Posted on 07 May 2015

So says an AILA memo issued on May 6, 2015. Some of more pertinent languages of the Memo are copied below in full.

1. "However, many people are not aware that even if the offering of EB-5 investment securities is exempt from registration, anyone who sells EB-5 investments must comply with the SEC registration requirements for broker-dealers. Under Section 15(a) of the Securities Exchange Act of 1934, only registered broker-dealers can solicit investors. If immigration attorneys receive a fee for referring clients to EB-5 regional centers, they are subject to the registration requirement. The SEC generally considers anyone who receives transaction-based compensation to be a broker-dealer who must be registered or associated with a registered broker-dealer."

2. "The SEC's message to immigration lawyers is clear: if you are being paid for finding investors in the U.S. or abroad, you must register with the SEC or become associated with a registered broker-dealer. The reason for the rule is simple. Unregistered brokers may be tempted to act in their own interest rather than in the investor's interest. SEC oversight and regulation are designed to protect clients by ensuring that the broker acts with care, competence, diligence, and in the best interests of the investor."

3. "Immigration lawyers acting as unregistered broker-dealers face serious consequences. The SEC can bring an enforcement action against individuals and firms for accepting unlawful finder's fees. Consequences can include fines . . . and even criminal charges . . . As a practical matter, this means that the lawyer who acted as an unregistered broker-dealer can be held liable to the investor for the full amount of the investment. Lawyers who act as unregistered broker-dealers also run the risk of allegations of professional misconduct and disciplinary actions from state bar."

4. "The recent SEC actions trageting EB-5 lawyers should sound a warning bell for immigration lawyers that they must comply with securities laws."