Banking and Finance

Notes from Association to Invest in USA (IIUSA) Annual Meeting in Washington DC

 So far, the most noteworthy parts of the meetings have been a Securities law panel with representatives from SEC and FINRA and a presentation made by the USCIS Director Nicholas Colucci.

The SEC representative from the Division of Enforcement focused his speech on the EB-5 private offerings, Regulation D and Regulation S exemptions, investment management company registration, investment advisors, and the registered broker/dealer issues. It is an open secret that the broker/dealer violation in EB-5 financing is prevalent. If an agent is soliciting investors, involved in sale of securities, identify investors for the EB-5 projects or Regional Centers, screening investors, negotiating investment terms, etc., he or she is likely to be considered a broker/dealer. The said practice can result in a registration requirement for the persons who introduce EB-5 investors and receive a transaction based fee.

The representative from FINRA warned the foreign finders, mostly overseas immigration agents, that if the commission structure is not readily disclosed to the investors in the offering documents, it may result in a registration requirement as a foreign associate, which may be subjected to a higher scrutiny from FINRA and the SEC.

Interestingly the FINRA representatives also spoke about the process of obtaining a brokerage license in the US. MSA work with experienced securities attorneys to obtain the said license for funds, consultants, and agents who would like to comply with the SEC/FINRA rules regarding broker/dealer issues.

A few weeks ago, SEC issued subpoenas to eight regional centers, including one of the largest in the country. The subpoena included boilerplate language inquiring upon unregistered broker/dealer issues. The SEC enforcement in the EB-5 arena has often been associated with securities fraud. It remains unclear whether SEC is going to launch the enforcement action in the broker/dealer violation 

US Immigration and Citizenship Services (USCIS) Director Nicholas Colucci was Guest of Honor at this annual event. His speech focused on the USCIS' recent efforts in the anti-fraud examination, inter-agencies coordination and stakeholder participation. He also described his background and hopes of improving the program.

It is encouraging to learn that USCIS will update processing time on a monthly basis. The latest statistics show that the regional center processing time has been reduced to 10.5 months on average, I-829 petitions reduced to 9 months, yet the 526 petition processing time was increased to 13 months from 11 months. Mr. Colucci also stated that USCIS has increased its staff by 40%. Currently, USCIS has more than 75 staff in the EB-5 Division (many who came from local Field Offices). The number is expected to increase to 100 by the end of the year.

The new director paid close attention to the international banking rules and money laundering. Two internal trainings will be held in USCIS on two often neglected areas: business and corporate structure and international banking/money laundering.

The director would like to reduce the rate of issuing the Request of Evidence (RFE). Most of the I-924 regional center petitions receive an RFE. At one time, the RFE rates had exceeded 80% according to an unofficial source. The director emphasized on the importance of Economic Studies to prove indirect and induced job creation. Soft costs such as attorney fees, real estate closing fees and transfer tax payment do not count towards the job creation expenditure.

Earlier in the day, Congressman Aaron Schock addressed the participants. He revealed that not only was he in support of Comprehensive Immigration Reform, but that he would be introducing a bill for the permanency of the EB5 Regional Center program. This was met with cheers! (More about this bill later) .

 Mona Shah is the principal of Mona Shah & Associates in New York City. The firm has assisted many Regional Centers and Investors in navigating this complex, nuanced and constantly changing area of immigration law. Mona has more than 18 years of legal experience in immigration law and extensive knowledge in EB-5 law as well as prior participation in major regional centers. Mona's substantial litigation background includes her representation of clients in both state and federal courts. She has handled complex immigration law appeals before the US Circuit Courts of Appeal nationwide. Before coming to the US, Mona was a Crown Prosecutor in the UK. Mona has authored and published numerous articles and has spoken extensively both in the US and overseas.

 Yi Song is an attorney at Mona Shah & Associates with advanced experience in EB-5 law and EB-5 related Securities law. She is admitted to practice law in New York and in the People’s Republic of China. She has authored many published articles on EB-5 financing and securities law. She practiced tax law in China and has experience in class action securities litigation cases. Yi is a graduate from Georgetown University Law Center in Washington, DC.

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