Lessons from recent FINRA actions against funding portals

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By Peter LaVigne and Christopher Grobbel (June 1, 2022, 5:57 p.m. EDT) – On May 4, the Financial Industry Regulatory Authority announced that it had imposed a combined fine of $1.75 million on two registered funding portals by FINRA for failing to comply with securities laws and rules designed to protect crowdfunding investors.[1]

Funding portals are a creation of Sections 4(6) and 4A(a) of the Securities Act, added by the Jumpstart Our Business Startups Act of 2012. They are regulated by FINRA and, along with registered brokers, may act as intermediaries, who are required to play a role in connection with any offering by a crowdfunding issuer, under Section 4(a)(6) and Regulations CF, the US Securities and the Crowdfunding from the Exchange Commission…

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