FINRA Guidelines: How to Apply as a New Funding Portal?

January 29, 2016, republished [original content]

FINA has published guidelines for firms to register as funding portals for Title III, Regulation Crowdfunding.

For your firm to become a registered funding portal with FINRA, your firm must complete the following steps.

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FINRA Funding Portal Rules and Related Forms Approved by SEC

January, 29, 2016, republished [original]

Executive Summary

The SEC approved FINRA’s proposed Funding Portal Rules and related forms for SEC-registered funding portals that become FINRA members pursuant to the crowdfunding provisions of Title III of the JOBS Act and the SEC’s Regulation Crowdfunding. FINRA’s Funding Portal Rules will become effective on January 29, 2016, which aligns with the effective date of the SEC’s registration rules under Regulation Crowdfunding. This Notice provides a brief overview of the new Funding Portal Rules and provides information for prospective funding portals that plan to apply for FINRA membership.

The text of the Funding Portal Rules is available on FINRA’s website. The related forms are available for reference in the Appendices. (As discussed further in this Notice, prospective funding portals must file all forms electronically through FINRA’s Firm Gateway. The forms will be accessible on Firm Gateway effective January 29, 2016.)

Questions regarding this Notice should be directed to:

Alissa Robinson, Director, Membership Application Program, at (212) 858-4764; or
Adam Arkel, Associate General Counsel, Office of General Counsel, at (202) 728-6961.
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SEC Comment Letters on Proposed Rules for Rule 501

Founder of Wales Capital, a business strategy and regulatory compliance consulting firm and CFIRA Executive Board Member Kim Wales’ submitted comment letters to the Securities and Exchange Commission on the proposed rules for Rule 501, “Accredited Investor Definition”, Rule 147, a new exemption in addition to modernization of the existing rule and Rule 504 which increases the offering limitation to $10 million. Ms. Wales commended the Commission “for responding to changes in state regulation and capital formation practices in a pro-active and forward thinking manner.” What is critical to stimulating the economy and getting early stage and emerging growth companies the money needed to grow and sustain themselves through capital raising options which can and will be significantly broadened, with no loss of investor protection, if the proposed revisions [incorporating CFIRA’s comments of course] are adopted.

The balance of the letters, outlines CFIRA’s support of multiple specific proposed changes to Rule 147 and Rule 504 and the the letters provided further alternative recommendations to expand the current proposals. As related to the Accredited Investor Definition, Kim Wales, DJ Paul and Chris Tyrrell, some of CFIRA’s leadership co-authored the letter to Commission in August 2014, in which many of their recommendations we incorporated into the proposal released in December 2015. Ms. Wales wrote a cover letter to Chair, Mary Jo White and resubmitted the original letter for further consideration.

Indeed, the proposed changes to Rule 147 and Rule 504 will be a game changer for entrepreneurs and small business looking for capital. They take a lot of the complexity out of, and add significant clarity to, the existing rules making them a much more viable and useful option for capital raisers.

Read the Accredited Investor Definition Letter
Read Rules 147 and 504 Letter



Host Sinclair Noe interviewed Kim Wales, the founder and CEO of Wales Capital and CrowdBureau, on his daily radio show during December 2015. Ms. Wales and Mr. Noe discussed the Securities and Exchange Commission releasing the final rules for Title III, Regulation Crowdfunding of the JOBS Act on October 30, 2015. Their interview spans current views on what is happening in the marketplace, opportunities for investors to make their money work for them and how small businesses can find investors for their company.

The market will not open until May 16, 2016. Ms. Wales reported that the SEC’s vote resulted in allowing people of all income sizes the ability to participate in equity and debt crowdfunding using a registered funding platform or a broker dealer; both will be registered with FINRA.

Companies can now raise up to $1 million in a 12-month period and individuals can invest more flexibly in businesses using Title III by adhering to investor protection rules for investment limits. The playing field is now more leveled across the capital markets.

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