FINRA Plans to Take Parallel Track on Crowdfunding Rules

Washington, DC – The FINRA Board of Governors today authorized FINRA to publish proposed rules for portals that will handle equity crowdfunding authorized under the federal JOBS Act. FINRA indicates that it plans to release its proposals around the same time that the SEC seeks comments from the public on its own crowdfunding rules, which is expected later this year. FINRA, the Financial Industry Regulatory Authority, plans to serve as the self regulatory organization for funding portals under the Jumpstart Our Business Startups Act. Congress passed the JOBS Act last year to enable small businesses to raise capital through equity crowdfunding.

The JOBS Act mandates the Securities and Exchange Commission to create rules to regulate equity crowdfunding. Under the statute, small businesses can raise up to $ 1 Million per year from a pool of small investors via online crowdfunding portals.

The FINRA board authorized FINRA to publish a Regulatory Notice to solicit comments on rules that will govern funding portals under Title III of the JOBS Act. “The proposed rules address among other things the membership application process for funding portals, fraud and manipulation, just and equitable principles of trade, communications with the public, supervision and anti-money laundering,” FINRA disclosed in a statement. FINRA expects to publish the Notice when the SEC releases its proposed rules pursuant to Title III of the JOBS Act for comment.”

A video summary of today’s board meeting can be reviewed here.

Summary by Brian Dengler. Feature image (c)

The Crowdfund Intermediary Regulatory Advocates

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