Crowdfunding Sites to Keep Reporting—SEC Seeks Comment on Rules
Published Date: 3/4/2025
Notice
Summary
The SEC wants to keep collecting info from funding portals—those websites that help people invest in small businesses—to keep things clear and safe for everyone. They’re asking for comments before extending the current rules that require portals to register, update info, and report changes. This keeps investors in the know and helps the SEC keep an eye on things without adding new costs or deadlines.
Analyzed Economic Effects
4 provisions identified: 0 benefits, 4 costs, 0 mixed.
Mandatory Registration and Form Filing
If you operate a funding portal, Rule 400 requires you to register electronically with the SEC using Form Funding Portal, become a member of a national securities association under Section 15A of the Exchange Act, file amendments when information becomes inaccurate, file successor and predecessor registration/withdrawal filings on Form Funding Portal, and promptly withdraw registration when you cease operating as a funding portal.
Extra Rules for Nonresident Funding Portals
Nonresident funding portals must: (1) obtain a written consent and power of attorney appointing a U.S. agent for service of process; (2) provide the agent's name and address on Schedule C of Form Funding Portal; (3) certify they can and will provide prompt access to books and records and submit to onsite inspection and examination by the Commission and any registered national securities association of which they become a member; and (4) furnish an opinion of counsel and certify these abilities on Schedule C.
Compliance Policies, Privacy, and Recordkeeping Rules
Rule 403 requires funding portals to implement written policies and procedures to comply with federal securities laws and to follow privacy rules. Rule 404 requires portals to keep certain books and records for at least five years (with the first two years kept in an easily accessible place) and to promptly furnish requested records to the Commission, its representatives, and the registered national securities association.
Estimated Industry Time and Cost Burden
The SEC staff estimates the annual industry burden to comply with Rules 400–404 is approximately 36,315 hours per year and approximately $618,293 per year in total industry cost burden; the Commission is seeking comment on this collection under the Paperwork Reduction Act with comments due by May 5, 2025.
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