VW Blog

FINRA Moves Forward Despite Pending SEC Crowdfunding Regulations

March 29, 2013   |   By Vela Wood

My last post, “Regulating Crowdfunding Portals,” addressed the timeline of the release of the crowdfunding regulations, some proposed SEC requirements for portals, and the portals’ adoption of their own regulations. Instead of patiently waiting for the SEC to release the crowdfunding regulations, the Financial Industry Regulatory Authority (FINRA) has decided to make a move that it hopes will eventually speed up the SEC’s adoption of the portal regulations.

On January 10, 2013, FINRA invited portals to fill out and file a voluntary Interim Form (http://www.finra.org/Industry/Issues/Crowdfunding/). The purpose of the Interim Form is to assist FINRA in developing the specific regulations for portals. In FINRA’s News Release (http://www.finra.org/Newsroom/NewsReleases/2013/P197636), the Interim Form asks some of the following information:

  • address of the portal
  • ownership
  • funding
  • management
  • compensation
  • business model and relationships.

Also, FINRA welcomes potential portals to submit any additional information the portals have that may be helpful. All of the files will be confidential, and FINRA expressly states that “in applying for membership, crowdfunding portals will not be bound by the[ir] responses.”

It appears the benefits of submitting an application may be minimal considering the portals will still need to fill out a final application for formal registration once the regulations are issued. Further, the final application may ask for more information and paperwork than the Interim Form. On the other hand, the Interim Form may provide FINRA and the SEC with enough information, or at least enough to make some headway, which will help streamline the adoption of the portal regulations and finally bring crowdfunding to life in the US. At the rate the SEC is currently moving, maybe both the SEC regulations and the crowdfunding regulations will be released around the same time. We can hope.


Posted in Crowdfunding, Funding & Capital Raising, Securities
Vela Wood
Vela | Wood is a boutique corporate law firm that focuses on small businesses, entrepreneurs, and startups.