The Financial Industry Regulatory Authority expelled on June 5 funding portal DreamFunded Marketplace LLC, and banned its co-founder and CEO from association with any FINRA funding portal member.
As stated in the FINRA Hearing Panel ruling, while registered with FINRA, DreamFunded and CEO Manuel Fernandez “committed multiple violations” of the Securities and Exchange Commission’s Regulation Crowdfunding Rules and FINRA’s Funding Portal Rules, as well as FINRA Rule 8210, which requires members or persons associated with a member to provide information orally, in writing or electronically upon request.
DreamFunded withdrew its registration with the SEC in 2017 and subsequently was “terminated” as a funding portal by FINRA.
In a Feb. 23, 2018, filing, FINRA’s enforcement division filed a complaint with the self-regulator’s Office of Hearing Officers, stating that Fernandez had repeatedly failed to provide timely and complete responses to requests for documents and information issued during FINRA’s investigation of the funding portal’s violations of crowdfunding rules.
Among the June 5 findings were that DreamFunded “made false and misleading statements” on its website regarding the due diligence that it conducted on issuers before allowing them to make crowdfunding offerings on its platform.
“They did so either with intent to mislead investors or in reckless disregard of the likelihood of misleading them,” FINRA’s order states. It also found the DreamFunded made “misleading” statements on their website about real estate transactions.
FINRA now oversees 45 crowdfunding portals.