FINRA recently filed a proposed rule change with the Securities and Exchange Commission in order to adopt the final rules relating to Title III crowdfunding "funding portals." This may signal that indeed the final crowdfunding rules may be released before year-end.
The proposed rules were released at the end of 2013 in Regulatory Notice 13-34. We described these in our crowdfunding alert in 2013, see http://media.mofo.com/files/Uploads/Images/131115-SEC-FINRA-Crowdfunding.pdf.
The final FINRA rules seem to align closely with the proposed rules, with some notable changes. For example, FINRA is not requiring a fidelity bond, nor is it requiring that funding portals implement an AML program.
The Funding Portal Rules are comprised of seven rules: 100, 110, 200, 300, 800, 900 and 1200. In addition, FINRA is adopting Rule 4518 that will apply to broker-dealer members.
See link: http://www.finra.org/sites/default/files/rule_filing_file/SR-FINRA-2015-040.pdf.
The Division of Trading and Markets also must adopt rules relating to funding portals and broker-dealer intermediaries in crowdfunded offerings.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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