“A Broker-Dealer Perspective on How EB-5 Issuers Can Safely and Effectively Work With Sales Intermediaries”

by Kurt Reuss, CEO, EB5 Deals 

There are hundreds of active EB-5 offerings in the market today and nearly all of them are working or planning to work directly with sales intermediaries — both foreign and domestic — to help sell their offerings.

As someone who is associated with one of just a few registered U.S. broker-dealers who specialize in the sale of EB-5 investments, I take particular care in working with foreign migration agents.

Working in a firm and selling securities under broker-dealer supervision, I am held to an exacting standard of compliance with U.S. securities laws and regulations, as well as the regulations of the Financial Industry Regulatory Authority (“FINRA”), the self-regulatory organization of registered U.S. securities broker-dealers, and by state securities regulators.

Because of periodic audits by both the SEC and FINRA, U.S. registered broker-dealers must carefully manage the offerings they sell, their solicitation practices, and their relationships with all intermediaries.

In working with foreign migration agents (intermediaries), a U.S. registered broker-dealer is required to engage in one of two categories of relationships: working with a Foreign Associate or working with a Foreign Finder.

Foreign Associates

A Foreign Associate must not be a US person and is required to be registered as an associated person with a U.S. registered broker-dealer; however, a Foreign Associate is exempt from the FINRA requirement to pass qualification exams. All the securities activities conducted by a Foreign Associate must be conducted outside the U.S. and may not engage any US person as a customer.

A Foreign Associate can solicit an investor and make representations about an investment (as opposed to a Foreign Finder, who can do neither.) A Foreign Associate is required to be supervised by the U.S. broker-dealer with whom he or she is associated.