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Overview

Sosnow & Associates is proud of its early experience forming, successfully registering and providing ongoing support to “Funding Portals” – a new class of SEC and Finra registered intermediaries who play a vital role in the equity crowdfunding ecosystem.

Our services include providing strategic advice, legal support, and document generation in connection with all aspects of the Finra new membership application, Finra interview, and Finra requests, investigations, or audits that follow, as well as post-launch activities.

Funding Portal Formation and Registration Services

Our Funding Portal pre-registration services include:

  • Corporate structuring and entity formation
  • Operating agreement or bylaws, resolutions, consents and foreign corporation filings, as needed
  • SEC registration and Finra New Member Application processes for Funding Portals
  • Assistance in completion of all registration documents, including Form NMA, Form FP, business plan, educational materials, security instruments, terms of service, privacy policy, investor correspondence and submission of supporting documents
  • Development of written supervisory procedures (WSPs) and necessary intermediary forms and agreements
  • FINRA requests, interviews and investigations
  • Advice relating to changes in business, ownership, or management
  • Licensing and registration of entities and personnel
  • Funding Portal advertising and sales literature reviews
  • Guidance on the latest regulatory and compliance rule releases and interpretations

Funding Portal Activities

Companies seeking to offer securities under the Regulation Crowdfunding exemption must either conduct their offering through a broker-dealer or a Funding Portal.

Funding Portals are responsible for protecting investors who access its site to potentially invest in Regulation Crowdfunding offerings. The JOBS Act, mandates, in particular that Funding Portals present and collect certain types of information from its users to help these prospective investors make informed investment decisions. A few examples include:

  • Ensuring that educational materials are available on its site and taking steps to confirm that investors have reviewed the educational resources available
  • Ensuring investors understand the risks inherent in a crowdfunding investment
  • Ensuring that investors utilizing its site do not invest more than their statutory limit each 12 month period

Funding Portals are also responsible for coordinating the release of investor funds to issuers and implementing other measures to reduce the risks of fraud. A few examples of ways Funding Portals protect the industry include:

  • Prohibiting directors, officers or partners of the funding portal from participating in a crowdfunding offering or having any financial interest in an issuer on its site
  • Protecting user information and complying with privacy rights affecting its users
  • Ensuring escrow proceeds are released only once the issuer reaches the target offering amount
  • Conducting diligence on the issuer, its officers, directors and 20% or more shareholders, reviewing the Form C and exhibits for completeness and other measures to reduce fraud

Restrictions on Funding Portal Activities

Unlike other broker-dealers, Funding Portals are prohibited from giving investment advice, soliciting offers, paying success fees to persons for solicitations, or handling investor funds or securities. We are pleased to help our clients navigate these often complex rules and be supportive of this community of professionals by providing ongoing guidance and support, post-formation.

Comprehensive Funding Portal Post-Registration Support

Our Funding Portal post-registration legal and advisory services are designed to keep your Funding Portal compliant. We offer flexible pricing plans depending on the scope of support your team needs and the level of operating activity you conduct. We are well attuned to your needs and are able assist to any degree as you scale up operations. Our services include:

  • External general counsel type support for routine matters experienced by the Funding Portal in the growth of its business operations
  • Ongoing support with routine FINRA requests, interviews and investigations
  • Advice relating to changes in business, ownership, or management
  • Updates to licensing and registration of entities and personnel
  • Ongoing Funding Portal advertising and sales literature reviews.
  • Guidance on the latest regulatory and compliance rule releases and interpretations.
  • Advice and consultation relating to issuer due diligence
  • Review of issuer Form C and exhibits
  • Support with issuer and investor inquiries
  • Advice and consultation regarding Funding Portal's ongoing compliance with written supervisory policies and procedures

Navigation Guide

  • Funding Portal Formation and Registration Services
  • Funding Portal Activities
  • Restrictions on Funding Portal Activities
  • Comprehensive Funding Portal Post-Registration Support

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