Front Desk
The U.S. Securities and Exchange Commission (SEC) granted a stay sought by a crowdfunding platform that was expelled by the U.S. Financial Industry Regulatory Authority Inc. (FINRA), reversing an earlier decision from 2021.
Following an enforcement action that found that the firm, DreamFunded Marketplace, LLC, had violated certain SEC and FINRA rules, the self-regulatory organization imposed sanctions, including an expulsion from membership in the SRO.
In 2021, the firm (and one individual) applied for a review of FINRA’s decision by the SEC, and sought a stay of the sanctions, pending the outcome of the review — the SEC denied the request for stay.
Now, it has reversed that decision.
In mid-April, DreamFunded filed a new motion seeking a stay of the FINRA sanctions.
According to the SEC’s order, that new motion argued that developments since the original stay decision — including a 2025 D.C. circuit court decision ruling that FINRA couldn’t expel a firm, Alpine Securities Corp., before it was able to obtain a review by the SEC — should also apply to its case.
Since then, FINRA revised its rules to conform with the court’s decision, which means that expulsions don’t take effect until they’ve had the opportunity for a review of the disciplinary decision.
As a result, the SEC ruled that it was “appropriate” to grant the firm’s motion — and it ordered the FINRA’s expulsion of DreamFunded is stayed.
The order noted that FINRA didn’t oppose the motion, but also didn’t concede that the firm met its burden for a stay.
