FINRA's Probable Intentions Regarding Crowdfunding

FINRA is requesting that crowdfunding platforms, websites, portals and companies voluntarily submit a report (a fairly simple form) to FINRA for its records. Aside from a nasty political way to overpower the much-maligned SEC, FINRA is probably making this move for the following reasons, according to Douglas E. Castle, CEO of CFI - CrowdFunding Incubator LLC:

1) To familiarize itself with the working of the industry;

2) To use the first group of respondents to help it in establishing a regulatable and sustainable "norm" for the industry;

3) To serve as a prelude to a mandatory filing of reports, making crowdfunding (even if there involves no offering of securities) into a regulated business;

4) To purge the industry of those portals which are effectively making public offering of securities without the proper license or regulatory filings -- committing civil and criminal offenses in the name of crowdfunding;

5) To ultimately impose standards upon crowdfunding portals regarding their fiduciary and custodial activities in dealing with large sums of contributor funds;

6) To create a conduit to those project promoters who are financially irresponsible, or have perpetrated financial frauds and to prosecute those who have breached the public trust and violated the tenets of fiduciary duty.

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