EB5 Due Diligence

Due Diligence for EB-5 Related Offerings

Readers who are familiar with EB-5 matters will be well aware of extensive discussion in the EB-5 industry with Regional Centers and Project Promoters on how to comply with US Securities laws. Prevail Capital is in a unique position to conduct its EB-5 business pursuant to regulatory requirements, and in doing so help promote further compliance and clarity to offering and sale of EB-5 private placements on behalf of Issuers and Sponsors.

Most of the antifraud provisions of the U.S. securities laws apply to all issuers of securities, whether or not issuers are relying exemption from registration under any of the applicable Acts. All managers of EB-5 investment funds should be mindful of potential fraud claims during every stage of structuring, forming and operating the investor funds in EB-5 Projects.

Certain Basic Requirements for Due Diligence

Broker dealers must conduct their own due diligence for each product to be sold.  Prevail will gather the necessary due diligence information, and will compile, review and assess such information with the Issuer (subject to the extent the information was available and disclosed by the Issuer):

  • Intended Use of Proceeds of the Offering – Reasonable investigations of the use of proceeds detailing those items that comprise the capital stack of the offering.
  • Issuer and Management – Reasonable investigations of the issuer and its management concerning the issuer’s history and management’s background and qualifications to conduct the business.
  • Issuer and Prospects – Reasonable investigations of the issuer’s business prospects, and the relationship of those prospects to the proposed price of the securities being offered.
  • Accuracy of Program Claims – Reasonable investigations into the structure and material statements of a program, including whether the program can meet its stated objectives.
  • Issuer’s Assets – Reasonable investigations of the quality of the assets and facilities of the issuer.

Information needed for review by Prevail could be expected to include some or all of the above elements (but subject at all times to availability of documents and additional information deemed necessary for a review of preliminary and final prospectuses, offering circulars, or offering memorandums, as applicable).