FINRA Issues Crowdfunding Portal Form

The Interim Form asks prospective funding portals to provide information including:

• ownership;
• funding;
• management; and
• business model and relationships.

FINRA says that it’s 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.

The North American Securities Administrators Association (NASAA) fired off a warning in early December about a surge in crowdfunding domains on the Internet.

An analysis of Internet domain names by state and Canadian securities regulators found nearly 8,800 domains with “crowdfunding” in their name as of Nov. 30, 2012, up from less than 900 at the beginning of the year. Of these websites, about 2,000 contained content, more than 3,700 had no content and more than 3,000 appeared to be “parked” and serving as placeholders to reserve a domain name for later use or sale, NASAA says. Of the domains with “crowdfunding” in their name, about 6,800 have appeared since April 2012 when the JOBS Act was signed into law.

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.