Marketing U.S. private securities offerings—particularly those under the EB-5 Immigrant Investor Program—requires careful navigation of complex legal, regulatory, and practical considerations. While EB-5 marketing historically focused offshore under Regulation S, the RIA has shifted a significant share of investor outreach into the U.S., requiring compliance with Regulation D. This section outlines the regulatory framework, common risks, and best practices for U.S.-based EB-5 marketing.
EB-5 Program Background
Since the EB-5 Program was implemented in the 1990s, most EB-5 fundraising activities occurred outside the United States under Regulation S, a securities exemption that in some ways offers greater flexibility compared to Regulation D. Under Reg S, investors need not be accredited, unregistered companies and individuals outside the U.S. can promote the offering to prospective investors and be compensated for success, among other promotional advantages.
Along with this flexibility, however, offshore solicitation has often led to many abuses by unregistered promoters, including:
- Misrepresentations caused by communicating information are often inconsistent with the offering documents;
- False or veiled promises of guaranteed green cards or repayment;
- Lack of transparency to investors regarding investment risks, conflicts of interest, compensation to promoters, and other material information; and
- Subscribing investors who may not be qualified for the investment and who may be left with limited liquidity after tying their money up for several years in an illiquid, at-risk investment.
Such abuses—misrepresentations, hidden fees, and unqualified investors—often stemmed from limited issuer oversight and lack of familiarity with U.S. advertising rules.
The Shift in Investor Marketing
Since the enactment of the RIA in 2022, the EB-5 market has undergone a significant transformation. A recent industry analysis of over 2,150 subscribed EB-5 investors indicated that 41% were already residing in the U.S. on a current non-immigrant visa. Further broken down by country of origin, this analysis revealed that 25% of Chinese-born and 82% of Indian-born investors documented were in the U.S. [1] InvestAmerica’s experience with the investors we have worked with post-RIA anecdotally supports this trend, with the percentage of those already located in the U.S. continuing to rise.
This shift increasingly places EB-5 marketing under Regulation D requirements as well as FINRA communication standards, which heighten compliance obligations for issuers, promoters, and others involved with the solicitation of EB-5 offerings.
Key Advertising Risks
When structuring EB-5 marketing strategies within the United States, stakeholders must balance multiple factors, including, but not limited to:
- U.S. securities advertising rules;
- What information can be shared and in what format;
- The investor’s location at the time of solicitation;
- The promoter’s registration status as a broker-dealer; and
- Investor care and disclosure considerations in accordance with the SEC’s Best Interest Rule
(Reg BI).
Under Regulation D, 506(b) only private outreach to pre-qualified investors is allowed, while 506(c) permits general solicitation but requires stricter verification of accreditation. The main consideration for what content can be shared in any written communication (whether via social media, email, brochures, presentation deck, etc.) is that the information in any marketing piece, separate from the private placement memorandum (PPM) must be fair, balanced, and not misleading. It must be consistent and not conflict with information in the PPM. This includes ensuring that the marketing information presented is not promissory in nature, does not exclude information in a way that creates a misleading message, does not include material information or language that overstates or embellishes the project or the offering terms, and also gives equal representation of the material risks of the investment opportunity.
We have seen scenarios where EB-5 issuers and industry professionals only considered the physical location of the investor being outside the U.S. at the time the subscription documents are signed and solely used this one factor to conclude the transaction was covered under Regulation S. This narrow interpretation, however, does not take into consideration the investor’s current U.S. visa status, his/her location when the offering was being promoted (regardless of whether it was directly promoted to the investor or to the investor’s parents outside the U.S.), whether or not information about the offering was publicly available on a website or other social media, or whether the promoter has any presence in the U.S. (either via a satellite office, extensive time spent in the U.S., if the promoter is communicating with an investor or his/her family while in the U.S. traveling or conducting site visits, among other scenarios). Each of these factors must be considered when determining if a subscription qualifies under Regulation S or Regulation D.
Success-based compensation tied to U.S. investors may only be paid to licensed broker-dealers. Paying unregistered promoters remains a key SEC enforcement risk. Further, only promoters who are actively registered with a broker-dealer firm and who possess the relevant securities licenses are eligible to receive success-based compensation associated with sourcing investors for an offering. Even though issuers may promote EB-5 offerings via their internal staff, success-based compensation associated with any investor sales is also not permitted under U.S. securities law. There are very limited exceptions to these requirements and very questionable gray areas that some EB-5 issuers have relied on in the past, as evidenced by several EB-5 sponsors, regional centers, immigration attorneys, and others having been investigated by the SEC.
As these examples demonstrate, whether a transaction is considered to be within the U.S. or offshore is dependent on a multitude of factors, many of which are not contemplated by EB-5 issuers or promoters, and which can prove to be a very costly regulatory decision that could harm the entire offering, including the issuer, the promoter, and, most importantly, the investor (and potentially all the other investors in the offering as well). The best practice is to consider all investors with any official legal or physical presence in the U.S. as a U.S. investor and thus the offering is subject to Regulation D.
The SEC’s Regulation Best Interest rule, while binding only on broker-dealers, sets a strong benchmark for EB-5 advertising: clear disclosures, management of conflicts, and putting investor interests first. This standard replaced the “suitability requirement” broker-dealers had been required to adhere to for decades, thus increasing the financial responsibility of broker-dealers when promoting and recommending investments to investors. While the rule is only required of broker-dealers and their representatives, it can serve as a great best practice consideration for issuers and other non-registered promoters when marketing EB-5 securities to prospective investors. Essentially, when marketing or making an EB-5 investment recommendation to an investor, broker-dealers must act in the best interest of the investor, without placing the broker-dealer’s financial or other interest ahead of the investor’s interests. Compliance is measured across four key obligations:
- Disclosure Obligation: Requires certain disclosures made to the investor, including the relationship between the broker and the investor.
- Care Obligation: Broker must exercise reasonable diligence, care, and skill in making the investment recommendation.
- Conflict of Interest Obligation: Broker-dealer must establish, maintain, and enforce written policies and procedures reasonably designed to address conflicts of interest.
- Compliance Obligation: Broker-dealer must establish, maintain, and enforce written policies and procedures reasonably designed to achieve compliance with Reg BI.
These obligations are mainly focused on protecting the investor; however, in doing so, can also reasonably be assumed to protect the broker, the issuer and all the other investors in the same
offering as well. The issues and challenges discussed above underscore the need for robust internal compliance protocols and clear oversight of promotional activities. It also makes a strong case for EB-5 issuers (NCEs) to consider utilizing a broker-dealer to manage investor outreach, onboarding, and processing for each EB-5 offering, particularly for all promotional activities conducted in the U.S. under Regulation D and with investors who are or may be considered a U.S. person for securities purposes.
Best Practices Recommendations
In summary, in order to mitigate risks and build investor trust, issuers, regional centers, and promoters should consider implementing the following practices:
- Compliance-Centered Marketing
- Ensure all promotional materials are pre-reviewed by securities counsel.
- Avoid language that could be construed as misleading, a guarantee of immigration benefits or financial returns, or is overly “salesy.”
- Tailor all information and disclosures to align precisely with offering documents.
- Give balanced exposure to key risks and conflicts of interest in marketing materials.
- Broker-Dealer Engagement
- Where possible, partner with registered broker-dealers to handle U.S.-based solicitation.
- Verify that compensation structures comply with securities laws.
- Digital Marketing Governance
- Establish internal review procedures for online and AI-driven content.
- Maintain detailed records of all digital campaigns, including audiences targeted and content delivered.
- Incorporate disclaimers and compliance statements prominently in digital outreach.
- Investor Suitability and Education
- Conduct thorough assessments of prospective investors to determine if they are qualified to invest in an EB-5 offering.
- Provide educational resources that explain EB-5 risks, liquidity limitations, and regulatory requirements.
- Document investor acknowledgment of risks and disclosures.
- Implement and follow the four general obligations of the SEC’s Regulation Best Interest rule.
- Monitoring and Oversight of Promoters
- Require transparency into the methods and materials used by third-party promoters.
- Institute periodic compliance audits of domestic and international marketing practices.
- Train promoters within the issuing entity on U.S. advertising restrictions, and their duty of care, duty of loyalty, and any fiduciary duties to private investors in their offerings.
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Investors aren’t the only ones benefiting from the passing of the EB-5 Reform and Integrity Act (RIA) in March 2022. As the most comprehensive legislative reform in the Program’s history, rural states throughout the United States have seen transformative effects from EB-5 financed projects.
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About the Author
Mike Xenick
Sr. Managing Director and Principal, InvestAmerica, a dba of Sequence Financial Specialists, LLC (member FINRA/SIPC)
Mike Xenick has been an investment banker for over 20 years, working to raise millions of dollars of debt and equity capital for middle-market companies. At InvestAmerica, he leads the firm’s EB-5 Advisory Services and Support practice. Prior to starting InvestAmerica, Mr. Xenick was Managing Partner of LCG Capital Advisors, a boutique lower middle market investment bank in Tampa, Florida for over five years, co-founding LCG’s FINRA-registered broker-dealer, representing dozens of the firm’s clients in raising debt/equity capital and merger & acquisition transactions. Mr. Xenick also managed LCG’s advisory practice areas where there was a notable element of regulatory compliance, as well as various strategic partnerships of the firm. In 2010, Mr. Xenick founded LCG’s EB-5 Advisory & Support Services Division, creating the capabilities and infrastructure noted above, spinning out this Division in 2012 into InvestAmerica Capital Advisors, LLC. Before joining LCG, Mr. Xenick was a Managing Director for five years at Atlantic American Capital Advisors, a Tampa based investment bank, where he led many successful corporate finance and merger and acquisition transactions across multiple industries including media/telecom, information technology, software, specialty finance, food and concessions, post-secondary education, manufacturing, business services, and nutritional health products. Prior to joining Atlantic American, Mr. Xenick worked at Communications Equity Associates (CEA), a boutique global investment and merchant bank, where he served as a Vice President in CEA’s global investment banking practice for over eight years. After joining CEA in 1994, he provided investment banking, private equity, and strategic advisory services to CEA’s entertainment and new media clients in the U.S., the Middle East, and Asia, and was specifically responsible for the telecommunications, technology, Internet, and music industries, and successfully closed numerous middle-market private placements, corporate financing and merger and acquisition transactions within these industries. Before CEA, Mr. Xenick worked for four years as a senior auditor for the international public accounting firm of Ernst & Young. He holds Bachelor’s and Master’s Degrees in Accounting from the University of Florida, is a CPA, and holds FINRA Series 7, 79, 24, and 63 securities registrations. He is married with three children. Mr. Xenick is a VFR-certified Private Pilot and has trained and competed in Iron-Man triathlon events.
References
[1] Source: Customers Bank database, consisting of 2,151 EB-5 investors who funded between April 2023 – March 2025
