Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
FINRA Fines Companies for Crowdfunding Violations
Author: Scarinci Hollenbeck, LLC
Date: May 10, 2022
Key Contacts
Back
FINRA has recently fined two registered funding portals, Wefunder and StartEngine, a combined $1.75 million for failing to comply with securities laws and regulations designed to protect crowdfunding investors.
Wefunder raised approximately $20 million more than they were permitted under FINRA’s current crowdfunding regulations. They also failed to promptly direct the transmission of funds to investors and issuers, improperly sent emails to investors recommending and soliciting investments despite this being in violation of a rule that prohibits such solicitations; included misleading communications on its funding portal website; and, failed to maintain a reasonable supervisory system to supervise its business.
StartEngine included issuer communications on its funding portal website that it knew or had reason to know were false or misleading, posted its own inaccurate counts of the number of investors in the offerings on its portal, and failed to reasonably supervise potentially misleading issuer-prepared content.
Jon-Jorge Aras, Partner and Chair of Securities Litigation at Scarinci Hollenbeck, LLC states, “With the growth of fundraising and marketing efforts over the internet, companies like Wefunder and StartEngine are unwittingly exposing themselves to the world of securities regulation and the steep consequences for failing to comply with the rules. The time spent upfront to ensure regulatory compliance can save significant cost and avoid the devastating effects of an SEC or FINRA enforcement action.”
If you have received a notice from FINRA that you are in violation of crowdfunding regulations, you should seek experienced legal counsel to mitigate your case. Contact the attorneys at Scarinci Hollenbeck, LLC at (201) 896-4100 or email info@sh-law.com to schedule your consultation.
- Practices: Securities Litigation & FINRA Arbitrations
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
IP Infringement: What Steps Can You Take If You're Affected?
IP infringement occurs when someone uses your intellectual property without your permission or beyond the scope of the permission you granted. Common examples of IP infringement include copying a product’s patented features or using a trademarked logo in a way that is likely to confuse consumers about the source or affiliation of goods or services. […]
Author: Michael Mietlicki
Public Allegations, Unfinished Investigation: What New Jersey Businesses Should Do Next
When facing public allegations of wrongdoing, companies should not let the speed of the public conversation dictate the speed of an investigation. An investigation designed to confirm a preferred narrative rather than establish the facts can create serious problems later, particularly if litigation, regulatory scrutiny, or employment claims follow. Key Takeaways When public allegations surface […]
Author: Sean M. Pena
BESS Interconnection: Managing Grid, Cost, and Schedule Risk
For battery energy storage system (BESS) developers, securing equipment and site control is only part of the development equation. A project must also connect to the electric grid, and increasingly, BESS interconnection is one of the biggest sources of schedule, cost, and contractual risk. Key Takeaways This article is Part 3 of our Battery Storage […]
Author: Nicholas Wall
Navigating Director and Officer Liability in Times of Financial Distress
Director and officer liability increases sharply when a company is in financial distress. Decisions that would draw little attention in a healthy business can later be challenged by creditors, shareholders, bankruptcy trustees, and regulators as breaches of fiduciary duty, fraudulent transfers, or oversight failures. Understanding where that exposure comes from, and how to manage it, […]
Author: Michael Mietlicki
Before You Buy: Managing Real Estate and Permitting Risk for BESS Projects in New York and New Jersey
For developers pursuing battery energy storage system (BESS) projects, finding the right property is only the beginning. BESS site selection is as much a legal and transactional exercise as a real estate decision, with risk analysis central to the project’s ultimate success. Key Takeaways The core questions for BESS site selection in New York and […]
Author: Nicholas Wall
What Business Owners Get Wrong Before Meeting a Litigation Attorney
What should you expect when meeting a litigation attorney about a business dispute? You should expect to describe the dispute in your own words, hand over the most important documents, flag any deadlines or immediate threats, and leave with a clearer picture of the problem, what information is still needed, and the likely next steps. […]
Author: Michael Mietlicki
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.