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
Corporate Consolidation and Antitrust Issues in Mergers
Corporate consolidation involves two or more businesses merging to become a single larger entity. The result is often a stronger and more competitive company that can better navigate today’s competitive marketplace. What Is Corporate Consolidation? Corporate consolidation closely resembles a basic merger transaction. The primary difference is that a consolidation creates an entirely new business […]
Author: Dan Brecher
What is Business Law and Why Is it Important?
Business law plays a critical role in nearly every aspect of running a successful enterprise, from negotiating a commercial lease to drafting employee policies to fulfilling corporate disclosure obligations. Understanding what is business law and your legal obligations can help your business run smoothly and build productive relationships with clients, business partners, regulators, and others. […]
Author: Dan Brecher
Corporate Transactions: Best Practices for Successful Deals
Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]
Author: Dan Brecher
How to Conduct a Fair and Legal Employee Termination in 2025
Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]
Author: Angela A. Turiano
Admin Dissolution for Annual Report: What You Need to Know
While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]
Author: Dan Brecher
What Is Antitrust Litigation Law?
Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]
Author: Robert E. Levy
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.