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
Supreme Court and Title VII: Implications for Reverse Discrimination
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Author: Matthew F. Mimnaugh
SPACs Are Back, What You Need to Know
Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]
Author: Dan Brecher
Short Form Merger: Streamlining the Process for Businesses
Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]
Author: Dan Brecher
Tariff Response Options for Small Businesses Facing Financial Distress
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
Author: Brian D. Spector
Common Causes of Partnership Disputes and How to Resolve Them
Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]
Author: Christopher D. Warren
Businesses Are Facing Financial Headwinds—A Practical Guide
*** The original article was featured on Bloomberg Tax, April 28, 2025 — As a tax attorney who spends much of my time helping people and companies who have large, unresolved issues with the IRS or one or more state tax departments, it often occurs to me that the best service that I can provide […]
Author: Scott H. Novak
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.