FINRA Funding Portal Examination Priorities - 2025
The FINRA Annual Regulatory Oversight Report details a number of common examination findings for Funding Portals. These common findings continue to be a priority for FINRA.
Funding Portals are reminded of the various safe harbors that they operate under and the various activities that are prohibited. These prohibited activities include, but are not limited to, holding, managing, possessing or otherwise handling investor funds or securities. Further, FINRA member funding portals are prohibited from making investment solicitations or recommendations.
Common examination findings include the following:
Inadequate Supervision:
Not establishing and maintaining a supervisory system that is reasonably designed to ensure the content of email communications with investors complies with the requirements of Regulation Crowdfunding.
Not establishing a system to track investments.
Not supervising access to the funding portal’s bank accounts.
Failure to Obtain Written Undertaking: Not obtaining the written undertaking required by Regulation Crowdfunding Rule 404 when using a third-party vendor to store the required records.
Missing Disclosures: Offerings on the platform do not contain all required disclosures as codified in Regulation Crowdfunding, in particular:
names of officers and directors of the issuer, and the positions these individuals held for the past three years;
descriptions of the purpose and intended use of proceeds, the process to complete the offering transaction or cancel an investment commitment, the ownership and capital structure, and the material terms of any indebtedness of the issuer; and
financial statements, as required by Regulation Crowdfunding Rule 201(t).
Failing to Report Written Customer Complaints: Not reporting written customer complaints regarding investor funds through FINRA Gateway.
Late Filings: Not making required filings in a timely manner—such as filing the funding portal’s Statement of Gross Revenue by the March 1 deadline—and not filing updates or changes to contact information within 30 days of the change.
Not Filing CMAs: Funding portals effecting changes in ownership without obtaining prior approval from FINRA, as required by Funding Portal Rule 110(a)(4).
Offering Investment Advice or Recommendations; Soliciting Purchases, Sales or Offers: Sending electronic correspondence to customers that recommend investments or otherwise solicit purchases of securities, thereby violating the prohibitions under Regulation Crowdfunding Rule 402(a) against funding portals engaging in such activity.
Misleading Statements: Failing to correct misleading statements that appeared on funding portals’ websites for offerings on their platforms.
Failing to Transmit Funds: Failing to promptly direct the transmission of funds to the issuers upon the successful completion of the offerings, or to return funds to investors upon cancellation of the offerings or in the event of oversubscription.
Failing to Take Measures to Reduce Risk of Fraud: Not denying issuers or offerings access to funding portals’ platforms, after funding portals had become aware of warning signs of potentially fraudulent activity during the onboarding process and during issuers’ campaigns.
Issues Regarding Maintenance and Transmission of Funds:
Directing investors to transmit funds, in connection with a Regulation Crowdfunding offering, through an entity that is not the qualified third party.
Failing to promptly direct the transmission of funds to the issuers upon the successful completion of the offerings, or to return funds to investors upon cancellation of the offerings, left in dormant escrow accounts or in the event of oversubscription.
Directing an escrow agent to release investor funds to an account controlled by the firm’s parent, rather than the issuer or investor.
Read more here: https://www.finra.org/sites/default/files/2025-01/2025-annual-regulatory-oversight-report.pdf
