The basics: Who are EB-5 investors, what are Regional Centers, what are EB-5 offerings?
July 12, 2015 Leave a comment
Making good policy for EB-5 requires understanding what EB-5 is. I made the tables below to help people think about what EB-5 investors, Regional Centers, and EB-5 offerings are, and what place they occupy in the world. Panicky journalists (and recently, panicky legislation) appear to assume that EB-5 exists in its own special, isolated world where EB-5 regulations or lack thereof are the only rules and USCIS policing or lack thereof provides the only enforcement. If this assumption were valid, then Senators Leahy and Grassley would be right to propose burdening USCIS with extensive responsibilities for the securities compliance issues, investor market integrity factors, foreign direct investment issues, and national security considerations that could potentially be associated with an EB-5 investment. If EB-5-world were isolated from the jurisdictions of the SEC, OFAC, FINRA, the FBI, the State Department, and so on, then the Investor Program Office at USCIS would indeed need to hire lots more staff and make lots more regulations to compensate. USCIS would need to create in-house EB-5-world versions of those agencies and their regulations and oversight and enforcement activities. The job-creation impact would be huge – not only duplicating federal agencies but creating new categories of specialists in the private sector (the expert in USCIS EB-5-world securities regulations as distinct from the SEC’s securities regulations for everyone else, the expert in EB-5-world foreign investment limitations as distinct from regular-world foreign investment limitations, and so on.) But all this is unnecessary if the EB-5 investor, Regional Center, and EB-5 offering in fact belong to the wide world. And clearly, they do. “I am a petitioner for EB-5 benefits” is one descriptor of an EB-5 investor, and he’s unique to EB-5 and under USCIS’s watch to that extent. “I am an investor in a US business” is another statement he can make, and that puts him in a larger group under the SEC’s range of expertise and OFAC and FinCEN and such limitations as applicable. “I am an immigrant,” he will also say, and that makes him the State Department’s baby and subjects him to DOS’s specialization and resources related to national security. As a foreign investor, he’s a foreign investor like other foreign investors, and as an immigrant, he’s an immigrant like other immigrants – not unique to EB-5 in those capacities, not a greater or lesser security risk because of EB-5, and not isolated from the factors that apply to other investors and other immigrants generally. I argue that policy makers who want to improve EB-5 should focus on what’s unique to EB-5. Where a “who am I?” or “what am I?” statement below is particular to EB-5, the corresponding rules/oversight should involve USCIS and may be an area where USCIS or the EB-5 regulations can improve. If the characteristic isn’t EB-5-specific, neither should the policy be.
To read more about securities law applications to EB-5 investors, regional centers and offerings, see the notes from the USCIS/SEC engagement and articles on the Investment Law Blog, EB-5 Diligence, and EB-5 Insights. This IIUSA article describes levels of screening for EB-5 investors. I welcome corrections and additions to my tables.