The New Intermediary on the Block: Funding Portals under the CROWDFUND Act

Abstract

The CROWDFUND Act, part of the JOBS Act signed into law in the United States in April 2012, provides for a new registered securities intermediary known as a funding portal. Funding portals or registered brokers must participate in crowdfunded offerings of securities conducted in accordance with the new federal offering registration exemption created in the CROWDFUND Act. Although regulations are forthcoming that will further illuminate the structure and function of funding portals, the CROWDFUND Act itself offers some insights into the role of funding portals in securities crowdfunding and allows for preliminary observations about legal issues inherent in funding portal status. This paper makes those observations and highlights areas of potential regulatory concern after labeling funding portals using existing terminology and locating funding portals in recognized taxonomies of securities intermediaries.

Keywords: crowdfunding, intermediary, broker, funding portal

JEL Classification: G24, G28, G30, G38, K22, L14, M13, N20