Before an EB-5 project is approved for listing, the broker-dealer conducts a due diligence review designed to evaluate whether the offering can be presented to prospective investors through a registered securities platform.
This review is not a guarantee of investment performance, immigration approval, repayment, or job creation. Rather, it is a structured review process intended to help the broker-dealer understand the offering, identify material risks, evaluate whether the issuer's disclosures appear complete and balanced, and determine whether the project is appropriate to make available to prospective investors.
The review generally includes the following areas:
The broker-dealer reviews the project's core securities offering documents, including the private placement memorandum, subscription agreement, operating agreement, loan agreement, investor questionnaires, and related disclosures.
The purpose is to understand the investment structure, investor rights, use of proceeds, risk factors, fees, conflicts of interest, repayment terms, and material obligations of the issuer, new commercial enterprise, job-creating entity, regional center, managers, and other key parties.
The broker-dealer reviews the project's EB-5 structure, including the regional center sponsorship, targeted employment area or rural designation, job creation methodology, economic report, business plan, and expected timing for deployment of investor capital.
This review considers whether the offering materials adequately explain the immigration-related assumptions, including job creation, redeployment risk, sustainment requirements, source-of-funds considerations, and the limits of any immigration-related projections.
The broker-dealer reviews the underlying project or business, including the project description, development or operating plan, budget, capital stack, sources and uses of funds, permits, market assumptions, project timeline, and relevant third-party reports.
For real estate projects, this may include construction budgets, appraisals, feasibility studies, senior loan documents, development agreements, and contractor information. For operating businesses, this may include business plans, financial projections, operating history, contracts, licenses, and industry-specific materials.
The broker-dealer evaluates how investor funds are expected to be used and how the project expects to repay EB-5 investors. This includes review of the capital structure, collateral, senior debt, repayment sources, cash flow projections, refinancing assumptions, sale assumptions, reserve accounts, and any guarantees or credit support.
The purpose is not to predict repayment, but to understand the repayment strategy and confirm that related risks are disclosed clearly.
The broker-dealer may conduct background reviews on the issuer, principals, managers, regional center, developer, sponsor, and other key parties. This may include reviewing litigation history, regulatory history, securities-related disclosures, disciplinary records, bankruptcy history, and other available public records.
The broker-dealer also reviews whether the issuer and offering participants have provided required information for compliance purposes.
The broker-dealer reviews all material fees and compensation arrangements, including administrative fees, broker-dealer compensation, referral fees, manager fees, developer fees, regional center fees, and other related-party payments.
The purpose is to identify potential conflicts of interest and confirm that compensation arrangements are disclosed to investors.
The broker-dealer reviews offering summaries, website copy, slide decks, investor communications, and other marketing materials before they are used. Materials must be fair and balanced and may not include exaggerated, promissory, misleading, or unsupported claims.
Claims regarding safety, repayment, immigration benefits, job creation, priority processing, project strength, or comparative advantages must be supported by appropriate source materials.
For investors who proceed with an offering, the broker-dealer is responsible for reviewing whether the investment appears suitable based on the investor's circumstances, objectives, risk tolerance, financial condition, liquidity needs, investment experience, and EB-5 objectives.
This process may include investor questionnaires, conversations with registered representatives, review of accredited investor status, and confirmation that the investor understands the material risks of the investment.
The broker-dealer maintains records of its review and requires supervisory approval before the project is made available through the platform. If material changes occur after approval, the broker-dealer may require updated documents, additional review, or revised disclosures.
Approval for listing means the project has completed the broker-dealer's review process and has been accepted for presentation through the platform. It does not mean the broker-dealer has eliminated investment risk, guaranteed repayment, endorsed the project as risk-free, or assured any immigration result.