On September 25, 2018, the Securities and Exchange Commission’s (“SEC”) Division of Trading and Markets released Compliance and Disclosure Interpretations (“C&DIs”) to frequently-asked questions regarding Regulation Crowdfunding. Specifically, the SEC provided C&DIs related to the Rule 300 series of Regulation Crowdfunding which applies to requirements for intermediaries, including broker-dealers and funding portals. Additionally, the SEC Staff provided C&DIs related to the Rule 400 series of Regulation Crowdfunding, which contains rules specifically applicable to funding portals.
These address, among other things, the financial interests of an intermediary in the issuer, due diligence requirements for intermediaries, requirements for the delivery of educational materials by intermediaries, intermediary requirements with respect to transactions, changes and cancellation of an offering, and intermediary payments to third parties for directing investors to their platform. The SEC Staff notes that an intermediary is permitted to have a financial interest in the issuer.
Additionally, the C&DIs provide instructions on how to register as a funding portal and notes amendments to Form Funding Portal must be made within 30 days after information previously submitted becomes inaccurate. Moreover, interpretation was given regarding the Rule 402 conditional safe harbor for funding portals and recordkeeping requirements for funding portals.
The C&DIs can be found in full on the SEC’s website.