FINRA has announced that it has fined Wefunder and StartEngine Capital for failure to comply with various securities rules and laws designed to protect crowdfunding investors.  Wefunder was fined $1.4 million for violations that occurred from 2016 to 2021.

FINRA found the company exceeded the scope of its permitted activities by raising $20 million in excess of the crowdfunding rule limits. In addition to the violation of crowdfunding limits, FINRA also found the company violated various other rules and regulations, including, failure to promptly direct the transmission of funds to issuers or investors as required; improperly sending emails to investors recommending soliciting investments being offered on its portal despite a rule that strictly prohibits such solicitations; including misleading communication on the funding portal website; and failure to maintain a reasonable supervisory system for purposes of supervising its business. In addition to the monetary fine, Wefunder will also be required to retain an independent consultant to assist in the improvement of its systems and procedures.

StartEngine Capital was fined $350,000.00 for violations that occurred in November 2016 to January 2018. Following its investigation, FINRA concluded the company included issuer communications on its site that it knew or had reason to know were false and misleading.  FINRA also found the company posted inaccurate counts of its number of investors and also failed to supervise an issuer-prepared communication that was potentially misleading.