The US crowdfunding platform uFundingPortal’s website has gone offline and has disappeared from the approved list of the US self-regulatory organization Financial Industry Regulatory Authority (FINRA), reports Crowdfund Insider.
uFundingPortal was a relatively new crowdfunding platform, which had a FINRA approval for a Title III crowdfunding and offered both equity investment and debt financing. The upper limit both for loans and equity financing was $1 million per year.
According to Crowdfunding Insider, however, the platform had numerous compliance issues and has been under review by FINRA, members of the Securities and Exchange Commission (SEC) and the CrowdCheck website, which performs due diligence checks on crowdfuindg platforms and consultations.
Sarah Hanks, member of SEC and CEO of CrowdCheck, for example, told Crowdfunging insider that a thorough review of all companies listed on uFundingPortal revealed an almost complete failure to follow disclosure and filing requirments.
“I don’t know whether it was the SEC or FINRA or both working together who decided that this portal should not continue to be involved in this market, assuming that this is a permanent state of affairs,” Hanks said. “But it does show that the regulators view the role of intermediaries as crucial to crowdfunding’s success and that non-compliance has consequences.”
Legitimate crowdfunding platforms in the US are regulated under the Title III of the Jumpstart Our Business Startups (JOBS) Act, enacted in 2012. It contains key provisions relating to securities offered or sold through crowdfunding and provides that the platforms must be registered with SEC and members of FINRA. There is also a set of reporting requirements.