FINRA has issued a voluntary Interim Form for Funding Portals designed for prospective crowdfunding portals under the JOBS Act.
Those intending to become a funding portal may voluntarily submit information regarding their business on the interim form.
The information received will help FINRA develop rules specific to crowdfunding portals.
FINRA and the SEC are holding open dialogue about the rules that should apply to funding portals. Once the SEC and FINRA have adopted funding portal rules, FINRA will issue a final funding portal application for FINRA regulation. In applying for membership, crowdfunding portals will not be bound by the responses provided on the interim form.
“FINRA is committed to ensuring that the capital-raising objectives of the JOBS Act are advanced in a manner consistent with Congressional intent and investor protection. Crowdfunding portals that file this form will provide FINRA with important information regarding portal business models, which will inform our rulemaking,” said Thomas Selman, executive vice president, Regulatory Policy.
The interim form asks prospective funding portals to provide information including:
- management; and
- business model and relationships.
FINRA is also asking prospective funding portals to supplement the information in the interim form with any additional information or documents that they believe would be helpful. FINRA will treat information that prospective portals file on the interim form as confidential.
Last year, FINRA solicited comments on the specific rules it should adopt for registered funding portals that become FINRA members. FINRA has also asked for comment on the application of existing rules to broker-dealers engaging in crowdfunding activities.
In response to that request, the CFA Institute made some recommendations, including that FINRA could put “warning labels” on crowdfunding investments, and greater disclosure of risks.