Broker Dealers

In the past, most EB-5 capital was raised without the assistance of registered broker dealers. However, recent enforcement trends are setting the stage for increasing involvement of licensed broker-dealers in the EB-5 industry.

Broker-dealers are crucial to the entire EB-5 Investor Program. Broker-dealers typically perform due diligence on a large number of EB-5 projects and assess the likelihood of a project’s success. They then provide potential EB5 investors with vetted information on good EB-5 projects, their financial strength, risk level with respect to capital repayment, job creation projections & other aspects.

Under US laws, broker – dealers are mandatorily required to be registered with the Securities & Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA) & the states in which they conduct business. Since broker dealers are subject to extensive regulatory requirements & oversight, opting for their services adds a layer of safety & security for the EB -5 investor.

Contrary to popular belief, hiring a licensed broker – dealer can prove to be more cost – effective for the investor. Unlicensed marketing agents, who are not subject to any regulatory control, can charge very high commissions which are eventually paid by the EB5 investor & hence adds to his/her costs. However, in the case of registered broker-dealers they cannot charge at will since their fees are limited by FINRA.

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