The FINRA Audit Mistakes You Want to Avoid

Seth Gordon: In preparing for this, this audit with FINRA, for becoming a registered crowdfunding portal. What, what have you seen are the biggest mistakes that founders, entrepreneurs have made when preparing for this or, or even, you know launching?

Mark Roderick: Well, there's two things. One, your website has to be ready. It's not like you go and become a funding portal and then start thinking about your website. The website is part of the FINRA application on the application form. It's you have to give FINRA a username and password to your fully functioning website so they can check it and make sure it works. So, you know, and those websites are not simple. So that that's another reason to, you know, white label it. So website . . . the application form. FINRA is a very, very bureaucratic organization. They want the I's dotted and the T's crossed. They pay attention. They pay an enormous amount of attention to details. For example, part of the application asks how your funding portal was funded, where did it get its money? And you may think it's fine to say, well, I personally contributed, you know, $10,000 out of my personal checking account. That's not enough for FINRA. They want to see the bank statements of the funding portal entity. They want to see your bank statements. They want to see the canceled checks or the wire transfers. If there's, if you own another company that funded the funding portal, then they want three sets of, of bank statements. It is any kind of sloppiness in the, in the application is counterproductive because it is just going to slow the process down. So I actually, I used to have clients complete the application themselves, and I don't do that anymore. I, I basically complete the application just to be lawyer-like and detail-oriented and leave nothing to chance because yeah, that that's the kind of organization FINRA is. They just, they want to see all the boxes checked and and if you don't check them, it just slows everything down.