FINRA Issues Crowdfunding Rules
November 11, 2012
The Financial Industry Regulatory
Authority (“FINRA”) has issued its
voluntary form for prospective
crowdfunding portals under the Jumpstart
Our Business Startups Act (“JOBS Act”),
signed in April 2012 by President Obama.
Anyone who intends to act as a
crowdfunding portal for individual
investments in start-up companies can
voluntarily submit information to FINRA,
which FINRA will use in drafting rules for
crowdfunding portals. The crowdfunding
form is not final and FINRA will not adopt
its final form until the SEC has adopted its
crowdfunding funding portal rules. The
JOBS Act requires the Securities and
Exchange Commission (the “SEC”) to
adopt rules to implement a new exemption
that will allow crowdfunding.
When this will occur is unclear since the
SEC has missed its December 31, 2012
legally mandated deadline. The JOBS Act
gave the SEC 270 days to create its
crowdfunding rules. Since the JOBS Act
was signed into law on April 5, 2012, the
270 day deadline was December 31, 2012.
Until the SEC creates its rules, any offers or sales of securities purporting to rely on the
crowdfunding exemption would be unlawful under the federal securities laws.
FINRA issued a statement concerning the voluntary form for funding portals, “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
FINRA CROWDFUNDING FORM
The FINRA crowdfunding portal form requires applicants to disclose, among other things,
including whether any of the principals in the crowdfunding portal have been accused of
securities violations or serious crimes.
The information provided at this stage will not be binding and FINRA will treat the
information as confidential.
The form also asks prospective crowdfunding portals to provide the following information
regarding the portal's:
business model and relationships.
“Crowdfunding portals that file this form will provide FINRA with important information
regarding portal business models, which will inform our rulemaking," Thomas Selman,
FINRA’s executive vice president for regulatory policy, said in a statement.
For further information about this article, please contact Brenda Hamilton, Securities
Attorney at 101 Plaza Real S, Suite 201 S, Boca Raton Florida, (561) 416-8956, by email at
email@example.com or visit www.gopublic101.com. This memorandum is
provided as a general informational service to clients and friends of Hamilton & Associates
Law Group and should not be construed as, and does not constitute, legal and compliance
advice on any specific matter, nor does this message create an attorney-client relationship.
For more information concerning the rules and regulations affecting the use of Rule 144,
Form 8K, FINRA Rule 6490, Rule 506 private placement offerings, Regulation A, Rule 504
offerings, Rule 144, SEC reporting requirements, SEC registration on Form S-1 and Form
10, Pink Sheet listing, OTCBB and OTC Markets disclosure requirements, DTC Chills, Global
Locks, reverse mergers, public shells, go public direct transactions and direct public
offerings or please contact Hamilton and Associates at (561) 416-8956 or by email a
firstname.lastname@example.org. Please note that the prior results discussed herein do not
guarantee similar outcomes.