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ARTICLE · 26 JUNE 2019

FINRA Issues First Litigated Enforcement Action Against Crowdfunding Portal

Reed Smith
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On June 5, 2019, a FINRA panel handed down its first enforcement action against a funding portal.

United StatesFinance and Banking
Herbert Kozlov
Herbert Kozlov
C. Neil Gray
C. Neil Gray
Le-El Sinai
Le-El Sinai
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On June 5, 2019, a Financial Industry Regulatory Authority (FINRA) panel handed down its first enforcement action against a funding portal. DreamFunded, a crowdfunding platform, was banned from FINRA membership, and Manny Fernandez, DreamFunded's CEO, was barred from association with any FINRA funding portal member. DreamFunded and Fernandez were further ordered to cover $15,900 in hearing costs.

Although FINRA previously settled with another crowdfunding website in 2016, the panel's 148-page DreamFunded decision marks the first litigated enforcement action taken by FINRA applying the crowdfunding regulations included in the Jumpstart Our Business Startups Act (JOBS Act) signed in to law by President Obama in April 2012, and represents important insight for industry participants in an area with, as yet, no regulatory guidance.

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This article is presented for informational purposes only and is not intended to constitute legal advice.

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