SEC Charges Unregistered Broker for Illegally Brokering Sales of EB-5 Securities

The Securities and Exchange Commission today charged a New York-based company with illegally brokering dozens of investments by foreign nationals seeking U.S. residency. 

Between April 2014 and March 2017, Edwin Shaw LLC solicited foreign nationals to invest in securities issued by a taxi and limousine company based in Queens, New York.  The investments were marketed to investors interested in applying for legal residency through the federal government’s EB-5 Immigrant Investor Program, which provides a path to legal residency for foreigners who invest directly in a U.S. business or private “regional centers” that promote economic development in specific areas and industries.

According to the SEC’s order, Edwin Shaw was not registered with the SEC as a broker or dealer when it engaged in the solicitations and otherwise effectuated these securities transactions, thereby violating Section 15(a) of the Securities Exchange Act of 1934.  For each successful investment, Edwin Shaw received a fee ranging from $5,000 to $50,000.  More than 30 foreigners invested in the program after solicitations by Edwin Shaw, which improperly used approximately $400,000 of the investor fees on its own expenses and personal expenses of Edwin Shaw’s principal.

“While raising money for an EB-5 project in the U.S., Edwin Shaw was not registered to legally operate as a securities broker,” said Marc P. Berger, Director of the SEC’s New York Regional Office. “The registration requirements are crucial to investor protection and we will continue to vigorously enforce them.” 

Without admitting or denying the allegations in the order, Edwin Shaw agreed to a cease-and-desist order and agreed to pay disgorgement of $400,000 plus prejudgment interest of $54,209.20 and a penalty of $90,535.

The SEC’s investigation was conducted by Phil Fortino and Thomas P. Smith Jr. and was supervised by Lara S. Mehraban.  The SEC appreciates the assistance of U.S. Citizenship and Immigration Services.