Securities Simplified: Mastering Compliance in Modern Markets

The private capital markets are evolving, driven by regulatory changes, technological advancements, and the increasing role of compliance in ensuring investor protection. Regulation CF, Regulation A, and Regulation D (506(b), 506(c), and 504) have opened new opportunities for issuers and investors, but they also present compliance challenges for FINRA broker-dealers, compliance officers, and regulated FINRA intermediaries.
In this blog, we simplify securities compliance, highlight key regulatory updates, and explore how technology—particularly the Compliance Desk within the Kore Infrastructure—ensures full adherence to FINRA Rule 17a-4.
Regulatory Landscape: Understanding CF, A, and D
Regulation CF (Crowdfunding): Expanding Access with Compliance Requirements
Regulation CF (Reg CF) enables startups and small businesses to raise up to $5 million annually from both accredited and non-accredited investors. However, broker-dealers and intermediaries facilitating Reg CF offerings must comply with strict FINRA and SEC requirements, including:
- Investor Limits: Reg CF has investment limits based on an investor’s income and net worth.
- Disclosure Requirements: Issuers must file Form C with the SEC, providing financials and risk disclosures.
- Bad Actor Checks: All issuers and key stakeholders must pass Reg D “bad actor” disqualification screenings.
- Transaction Compliance: Broker-dealers must ensure that transactions are conducted in compliance with AML (Anti-Money Laundering) and KYC (Know Your Customer) requirements.
Compliance Tip: Using a centralized compliance infrastructure, such as the Compliance Desk within Kore Infrastructure, streamlines these requirements, ensuring seamless investor verification and regulatory filings.
Regulation A (Reg A+): A Mini-IPO with SEC Oversight
Regulation A allows companies to raise up to $75 million per year through public offerings without undergoing a full SEC registration process. While this provides greater fundraising flexibility, it also brings higher compliance obligations, including:
- Tier 1 vs. Tier 2 Offerings: Tier 2 requires ongoing reporting (Form 1-K, 1-SA, 1-U) and financial audits.
- Blue Sky Law Considerations: Tier 1 offerings must comply with state-level regulations.
- Secondary Market Trading: Broker-dealers managing secondary transactions must meet FINRA Rule 2111 (Suitability Rule) and AML/KYC guidelines.
Compliance Tip: Compliance Desk automates reporting, trade tracking, and document retention, ensuring that broker-dealers and issuers meet both SEC and FINRA obligations.
Regulation D: The Private Capital Markets’ Workhorse
Regulation D offers exemptions from full SEC registration, allowing issuers to raise unlimited capital under the following structures:
- Rule 506(b): Allows issuers to raise from accredited investors and up to 35 sophisticated investors, with no general solicitation.
- Rule 506(c): Allows public solicitation, but all investors must be verified as accredited.
- Rule 504: Allows raises of up to $10 million annually, with potential state-level restrictions.
For broker-dealers handling Reg D transactions, key compliance considerations include:
- Accredited Investor Verification: Ensuring compliance with SEC Rule 501 for investor accreditation.
- Advertising and General Solicitation: 506(c) offerings must document investor verification before accepting capital.
- Transaction Reporting: SEC filings (Form D) and AML/KYC screenings are mandatory.
Compliance Tip: Compliance Desk’s AI-powered investor verification and automated compliance tracking help broker-dealers manage complex Reg D transactions with ease.
Technology & Compliance: The Role of Kore’s Compliance Desk
Ensuring 100% compliance in modern markets requires digital infrastructure that seamlessly integrates with FINRA and SEC requirements. The Compliance Desk within Kore Infrastructure provides:
✅ Fully Automated FINRA Rule 17a-4 Compliance
- Ensures that all records, investor data, and communications are stored immutably and securely as per SEC & FINRA mandates.
- Reduces compliance risk by centralizing all transactional records in an auditable, tamper-proof environment.
✅ Integrated Investor Verification (KYC, AML, Accredited Status)
- Automates accredited investor verification for 506(c) and Reg A+ offerings.
- Enhances compliance by performing real-time AML/KYC checks, reducing broker-dealer liability.
✅ Regulatory Reporting & Audit Readiness
- Streamlines Reg CF, Reg A, and Reg D filings with automated document retention.
- Simplifies FINRA, SEC, and state-level reporting, ensuring firms are always prepared for audits.
✅ AI-Powered Trade & Secondary Market Compliance
- Facilitates seamless secondary market trading while ensuring transactions remain fully compliant with SEC and FINRA rules.
- Automates investor matching, record-keeping, and transaction clearance.
By leveraging Compliance Desk, broker-dealers and compliance officers can fully digitize their compliance workflows, reducing costs and regulatory risk while improving operational efficiency.
Real-World Case Study: How Compliance Desk Ensured 100% Regulatory Adherence
📌 Challenge: A broker-dealer facilitating a 506(c) offering struggled with accredited investor verification, manual reporting, and document retention compliance.
📌 Solution: By integrating Compliance Desk, they:
- Automated accredited investor verification, reducing processing time from weeks to minutes.
- Stored all transaction records per FINRA Rule 17a-4, eliminating manual errors and compliance gaps.
- Ensured SEC & FINRA audit-readiness, simplifying investor tracking and transaction reporting.
📌 Outcome: The firm maintained 100% compliance, reduced administrative costs by 40%, and enhanced investor trust.
Final Thoughts: Compliance is No Longer an Option—It’s a Competitive Advantage
Regulation CF, A, and D provide powerful capital-raising opportunities, but compliance complexities can create barriers for broker-dealers and FINRA-regulated intermediaries. The Compliance Desk within Kore Infrastructure simplifies compliance, ensures 100% adherence to FINRA Rule 17a-4, and allows firms to focus on growth rather than regulatory risk.
Schedule a Meeting to See Compliance Desk in Action
🔗 Click here to set up a demo and discover how Kore’s Compliance Desk can help your firm navigate the evolving regulatory landscape with confidence.