The SEC has approved FINRA Funding Portal Rules, and FINRA has issued on January 29, 2016 Regulatory Notice 16-06. This regulatory notice outlines the process one needs to undertake to become a Title III Funding Portal member. If you wish to participate in a Title III business, now is the time to file your Funding Portal New Member Application with FINRA.
Funding Portals, unlike Title II Funding Platforms, have to be SEC registered FINRA members, and will be directly regulated by FINRA, similar to a broker-dealer. Form Funding Portal (Form FP) is now available to interested parties who wish to begin the application process.
Form FP requires applicants to submit information concerning the Portal’s organization chart, business model, contractual relationships, funding sources, recordkeeping and written procedures, including written supervisory procedures (WSPs), among other items. As FINRA does a thorough vetting of broker-dealers, it can be anticipated that the funding portal review will be equally thorough, and comprehensive in scope. FINRA will be interested in the supervisory system, including procedures and controls, to be put into place to ensure a Funding Portal’s compliance with the federal securities laws and applicable FINRA Rules. These include WSPs that are comprehensive and ensure that a Portal will meet all of its regulatory requirements.
FINRA will evaluate each application against its standards for admission. The process will include one or more membership interviews. While applications will be initially assessed for completeness by FINRA within 14-days of the initial filing, the process anticipates follow-up requests for additional information until the review is complete. As all Title III Crowdfunding rules are effective on May 16, 2016, don’t delay applying to become a FINRA Funding Portal.
About Scott Andersen:
Scott is principal at finLawyer.com and General Counsel of FundAmerica. He has also been Deputy Regional Chief Counsel at FINRA, Enforcement Director at FINRA and the NYSE, Co-Chief of the Securities Prosecutions Unit of the NY Attorney General’s office, and Asst. Attorney General for the State of NY. He has been investigating, prosecuting and supervising criminal, civil and regulatory enforcement actions for over nineteen years. He concentrates his practice on SEC and FINRA regulatory defense and securities regulatory counseling.
About Scott Andersen:
Scott is principal at finLawyer.com and General Counsel of FundAmerica. He was most recently the Deputy Regional Chief Counsel at FINRA, and prior to that was the Enforcement Director at FINRA and the NYSE, Co-Chief of the Securities Prosecutions Unit of the NY Attorney General’s office, and Asst. Attorney General for the State of NY. He concentrates his practice on securities and regulatory law.
The information and materials in this article are provided for general informational purposes only and are not intended to be legal advice. The issues discussed include complicated areas of law and legal advice should be obtained from a securities attorney about your specific circumstances.