The EB-5 employment-creation immigrant visa category,¹ especially its more popular regional center pilot program,² is on the rise as a favored form of U.S. immigration for wealthy foreign nationals. The EB-5 regional center program³ requires no labor market test to prove the unavailability of U.S. workers; no anchor relative in the United States to petition on the immigrant’s behalf; no claim of extraordinary or exceptional ability; no fear of persecution in the homeland; no business to manage directly on a day-today basis; or job to perform for a sponsor. The category instead allows conditional and permanent resident status by investing lawfully acquired funds (at least $500,000 within a rural area or one of high unemployment, or $1 million anywhere else) in a regional center approved by U.S. Citizenship and Immigration Services (USCIS). To qualify, each investor must directly or indirectly through the regional center create ten full-time jobs in the United States.

From the investor’s point of view, he or she is provided with offering materials from the regional center, such as a private placement memorandum and subscription agreement, and asked to sign the subscription agreement and deposit his money usually into an escrow account or an account controlled by the regional center. An investor, his or her immigration counsel, and/or perhaps even some principals within a regional center may not fully understand the function of those offering documents. The purpose of this article is to provide insight regarding the securities law requirements governing regional center offerings.⁴

When a regional center forms a limited partnership or limited liability company in which the EB-5 investor would become a limited partner (or member, in the case of a limited liability company), the regional center is offering an EB-5 investor a security.⁵ Therefore, a regional center must comply with federal and state laws in conducting the offering of securities.  Given that the main focus of an EB-5 investment for the investor is obtaining permanent residency in the United States, investors may not recognize or consider that a regional center is offering a security. More importantly, EB-5 investors most likely will have no idea what the implications are if a regional center tells them they are being offered or sold a security. Some regional centers may themselves not be fully aware of these implications.