FINRA Funding Portals Enforcement Actions
On May 4, 2022, FINRA announced that it has fined two FINRA-registered funding portals a combined $1.75 million for failing to comply with securities laws and rules designed to protect crowdfunding investors.
The FINRA Press Release emphasizes the Funding Portal’s supervisory role in the Issuer’s offering of securities to investors. The FINRA Press Release and respective enforcement actions are linked below and include topics related to communications with the public, prohibition on solicitations, issuer and offering page communication supervision, general supervision and supervisory systems, escrow activities and more.
Please feel free to reach out with any questions, comments or concerns that these materials may create. Happy to help in any way that I can.
FINRA Press Release
https://www.finra.org/media-center/newsreleases/2022/finra-fines-for-crowdfunding-rule-violations
Wefunder Enforcement Acton
https://www.finra.org/sites/default/files/2022-05/Wefunder-2021071940801.pdf
Primary Rule Violations Cited:
FINRA Rule 200(a) – .. shall observe high standards of commercial honor and just and equitable principles of trade.
Reg CF Rule 402(a) – Conditional safe harbor.
Reg CF Rule 301(a) – Measures to reduce risk of fraud.
Reg CF Rule 303(e) – Maintenance and transmission of funds.
StartEngine Enforcement Action
https://www.finra.org/sites/default/files/2022-05/StartEngine-matter.pdf
Primary Rule Violations Cited:
FINRA Rule 200(c) – Communications with the Public
FINRA Rule 300(a) – Supervisory System
FINRA Rule 200(a) – .. shall observe high standards of commercial honor and just and equitable principles of trade.
