RCBJ Perspectives: RFEs and NOIDs – Disclosure Guidelines and Implications
By Osvaldo F. Torres and R. William Cornelius | EB-5 Corporate & Securities Attorneys at Torres Law
This article originally appeared in the April 2025 edition of IIUSA’s Regional Center Business Journal.
READ THE FULL SPRING 2025 EDITION OF THE RCBJ
Introduction
This article is basic. It is intended for the EB-5 “newcomer” managing or sponsoring an EB-5 project that receives a Request for Evidence (RFE) or a Notice of Intent to Deny (NOID) from USCIS. The impetus for authoring this article was fueled by a prominent EB-5 immigration attorney. The attorney asserted that in their experience an RFE had never triggered the issuance of an investor notice or offering supplement. That assertion was concerning. The general purpose of an investor notice and offering supplement is to inform investors of major events or changes affecting the EB-5 project or offering. The securities laws require that investors are treated with transparency and are afforded the opportunity to make an investment decision based upon truthful and accurate information that does not omit material facts.
The EB-5 Immigrant Investor Program provides foreign investors with a pathway to U.S. residency by investing in qualifying U.S. projects. The program requires compliance with both immigration laws (such as the EB-5 Reform and Integrity Act of 2022 and USCIS regulations) and securities laws (SEC rules and regulations). When a project receives an RFE or a NOID from USCIS, it raises serious legal considerations for issuers of EB-5 securities. These notices can impact project approval, investor petitions, and securities laws compliance, particularly with respect to disclosure obligations and potential liabilities.
This article provides a high-level view of RFEs and NOIDs from an EB-5 immigration perspective. It also provides an overview of securities law considerations necessitated by RFEs and NOIDs and offers practical guidance for EB-5 issuers navigating these challenges.
Understanding RFEs and NOIDs in the Context of EB-5
USCIS typically issues RFEs or NOIDs when an EB-5 application or petition lacks sufficient evidence or contains inconsistencies:
• RFEs generally indicate missing or insufficient documentation; USCIS typically grants the applicant or petitioner time to submit additional information that is responsive to the RFE before making a decision.
• NOIDs are more serious than RFEs and generally mean the application or petition contains significant deficiencies. Though USCIS affords applicants or petitioners the ability to respond, the mere issuance of a NOID signals that USCIS intends to deny the application or petition unless the deficiencies are resolved.
Though USCIS may issue RFEs and NOIDs for a myriad of reasons, common examples include:
• Project Deficiencies – Lack of evidence supporting job creation, unknown or incomplete sources of financing, unverified uses of funds or economic impact studies, or incomplete business plans.
• Investor-Specific Issues – Inadequate source of funds documentation or failure to demonstrate the investment is “at risk.”
• Material Changes – Significant deviations from the project’s original plans (including its business plan), which USCIS may view as ineligible under EB-5 rules.
For issuers, these RFEs and NOIDs can signal potential delays, investor concerns, and compliance risks under both immigration and securities laws.
Immigration Law Implications
Although the primary focus of this article pertains to the securities laws issues relating to RFEs and NOIDs, the following provides a basic analysis of the implications from an immigration perspective.
Project Compliance Risks
• USCIS may invalidate a business plan if job creation estimates or economic models lack credibility. Any such determination could be fatal to the project’s application, which could in turn preclude the issuer from accepting additional EB-5 capital.
• If a project’s financing structure is unclear or improperly documented, it may lead to a denial of the project’s application, and ultimately, all associated investor petitions.
• Any material changes to the project must be carefully managed to avoid violating the provisions of the EB-5 program.
Impact on EB-5 Investors
• An RFE or NOID puts investors’ green card approvals at risk. If unresolved, either may result in denial of I-526 or I-526E petitions.
• A project-related NOID can affect all investors involved in a new commercial enterprise.
• If denied, investors may lose their priority date, which could delay or hinder the immigration benefits sought under the EB-5 Program, unless otherwise protected under the EB-5 Reform and Integrity Act.
• Investors denied due to a project failure may seek refunds, which could create financial strain for EB-5 issuers and project companies alike.
Response Strategies
Upon receiving an RFE or NOID, issuers should be prepared to submit to USCIS a comprehensive response with supporting evidence. Though consulting EB-5 immigration attorneys to help draft such a response is always advisable, issuers should also be prepared to do the following:
• Gather all appropriate documents and records that are responsive to the issue(s) raised in the RFE or NOID, including job creation estimates, financial projections, and business plans.
• Act within the strict response deadlines.
• Coordinate responses carefully to avoid triggering new issues with USCIS or contradicting earlier filings.
Securities Law Considerations
Materiality and Disclosure Obligations
As a general rule, U.S. securities laws require issuers to disclose all material facts to investors so they can make informed investment decisions. In this context, issuers must consider the following:
• An RFE or NOID may constitute a material event that requires an update to offering documents (e.g., Private Placement Memorandum (PPM)).
• If investors were not adequately informed of project risks, they may have grounds to claim misrepresentation or fraud.
• Omitting material information (such as an ongoing NOID) could violate anti-fraud provisions under the Securities Act of 1933 and the Securities Exchange Act of 1934.
Potential Legal and Regulatory Risks
• If USCIS denies a project due to misrepresentations in offering materials, the SEC may investigate further.
• Investors may sue for securities fraud if issuers fail to disclose material risks related to their immigration petitions.
• Investors may be entitled to rescind their investments due to an RFE or NOID if the risks were not properly disclosed and/or the issue(s) raised in such RFE or NOID constitute a material change.
Best Practices for Securities Compliance
• In order to maintain transparency, update investors about RFEs, NOIDs or other material developments as soon as possible.
• Revise and/or supplement offering materials if the project’s risk profile changes.
• Consult securities counsel to ensure compliance with SEC regulations.
• Avoid misleading statements—for example, if a NOID suggests job creation estimates are flawed, do not continue presenting those estimates or represent that the project as fully compliant.
• Plan for contingencies, such as investor refunds if the EB-5 project fails USCIS scrutiny.
Best Practices for EB-5 Issuers
The framework set forth in this section is intended to guide EB-5 issuers on best practices for how to navigate the complexities of securities laws compliance while also addressing potential investor relations concerns following receipt of an RFE or NOID.
1. Immediate Action Upon Receiving an RFE or NOID
• Engage EB-5 immigration and securities attorneys immediately.
• Respond to USCIS with comprehensive evidence—including third-party reports, financial records, and legal briefs.
• Prepare investor communications, ensuring transparency while protecting against securities liability.
• Cease dissemination of marketing materials that conflict with newly issued investor communications relating to the RFE or NOID.
2. Maintain Investor Trust and Compliance
• Timely disclose RFEs and NOIDs to investors while avoiding panic.
• Avoid exaggerated reassurances—underplaying risks can lead to future legal issues.
• Consider contingency planning, such as restructuring projects to accommodate USCIS concerns.
3. Strengthen Due Diligence and Compliance Measures
• Ensure business plans and economic analyses align with USCIS expectations before submitting petitions.
• Conduct internal audits of EB-5 projects to confirm adherence to both immigration and securities regulations.
• Regularly update offering documents as regulatory landscapes shift.
Importantly, there may be an occasion where the EB-5 issuer adamantly believes an RFE or NOID lacks merit or was issued in error. On the basis of that belief, the EB-5 issuer may contend that it prefers to delay disclosure because it would unnecessarily cause concern to EB-5 investors that have already subscribed and would likely chill prospective investor interest. That position, while potentially understandable, presents a significant challenge from a securities law perspective, especially if a NOID is at issue. A misstep following receipt of a NOID that is not timely disclosed may expose the issuer and its principals to significant risk, liability and legal expense. In such a case, at a minimum, the issuer should cease all marketing and solicitation efforts and refrain from accepting new investors in the EB-5 offering until the issue(s) raised in the NOID have been favorably resolved. If the resolution of the NOID is not favorable and the investors were not timely notified, the subscribed investors may allege they were deceived and that their immigration journey was unlawfully hampered or fatally frustrated.
Conclusion
An RFE or NOID in an EB-5 project may signal significant risks for both immigration compliance and securities law adherence. Failure to properly respond can lead to petition denials, loss of investor confidence, SEC scrutiny, and potential litigation. Issuers must balance their obligations to USCIS and investors by ensuring they provide accurate, complete disclosures while also addressing project deficiencies.
By taking a proactive approach, promptly engaging the necessary professionals and legal experts, and maintaining transparency, issuers can navigate these challenges effectively, safeguarding both investor interests and project success.
