The Financial industry Regulatory Authority (“FINRA”) declared on June 5, 2019 that it expelled funding portal member DreamFunded Marketplace, LLC (“DreamFunded”) (CRD#: 283594). FINRA also barred its CEO and co-founder, Manuel Fernandez (CRD#: 6639970). Evidently, in an Extended Hearing Panel Decision #:2017053428201, FINRA’s Office of Hearing Officers found that DreamFunded and Fernandez did not properly respond to FINRA’s requests during an investigation. Fernandez, a person with little experience in the securities industry, supposedly made misleading statements about investments offered through DreamFunded. Here’s more on the disciplinary action.

DreamFunded Marketplace CEO Makes False Or Misleading Statements About Issuers On Its Platform

DreamFunded Market Place was a funding portal rather than a broker-dealer. Funding portals are SEC-registered entities which are designed to facilitate crowdfunding transactions. These days, crowdfunding is an increasingly popular mechanism to offer and sell securities to investors.

Here, Fernandez posted a YouTube video about an issuer who was going to make an offering through DreamFunded Portal. Notably, in the video, Fernandez seemingly offered $1,000,000.00 for a 30% stake in the company.

Supposedly, the staff in FINRA’s Membership Application program viewed Fernandez’s video as conflicting with Crowdfunding Rules. Particularly, the Rule does not allow an intermediary’s principal (e.g. Fernandez) from having any interest in the issuers who use the intermediary’s platform to raise capital. Supposedly, Fernandez claimed he did not invest in the issuer. However, this led FINRA to believe he made misrepresentations to induce investor purchases. Namely, FINRA suspected that Fernandez persuaded possible investors that the issuer was worth investing in because of Fernandez making the investment himself – even though he apparently did not.

FINRA Formally Investigates Whether Fernandez Misused Investor Funds

FINRA’s Office of Fraud Detection and Market Intelligence began a formally investigation into Fernandez and DreamFunded. However, after Fernandez testified, FINRA became more suspicious. FINRA began investigating if he misused investor’s money designated for creating and managing the Portal. Significantly, DreamFunded and Fernandez did not respond to a number of FINRA’s requests. This prevented FINRA from analyzing documents and transactions to determine Fernandez’s potential misappropriation of investor funds. Because of this, FINRA held that DreamFunded and Fernandez violated FINRA Rule 8210.

Notably, Rule 8210 authorizes FINRA to require a member including DreamFunded to turn over books, records, information or documentation as part of a FINRA investigation. Also, FINRA can require under this Rule that the member testify about any alleged misconduct against them which raise questions about violations of FINRA Rules. FINRA says that Funding Portal Rule 800(a) made Rule 8210 apply to portal members including DreamFunded.

Fernandez Lies About Due Diligence Of Investments Offered Through DreamFunded Marketplace

Next, FINRA says that Fernandez violated Funding Portal Rule 200(b) because he made untruthful and suspicious statements about investing in an issuer on social media and DreamFunded’s website. FINRA says that Fernandez engaged in deceptive acts and presented a false narrative of the investment opportunities. For example, DreamFunded supposedly made false statements about its execution of due diligence on the issuers involved in the crowdfunding offerings. Particularly, DreamFunded held itself out as having a team that carefully reviewed issuers who offered securities through the Portal. However, DreamFunded did not actually do any due diligence, according to FINRA.

Not only that, but FINRA says DreamFunded and Fernandez violated FINRA Portal Rule 200(c) because of making misleading statements regarding its real estate transactions. Supposedly, DreamFunded made it seem like the real estate investments were the same as bank deposits.

Did You Purchase Investments Through DreamFunded Marketplace?

Lars Soreide Highest Ethical Standard Award 2018

Lars Soreide Highest Ethical Standard Award 2018

If you have experienced losses by investing through DreamFunded and Manuel Fernandez, contact Soreide Law Group at (888) 760-6552 and speak with experienced counsel about a possible recovery of your investment losses. Soreide Law Group represents clients on a contingency fee basis and advances all costs. The firm has recovered millions of dollars for investors who have suffered losses due to misconduct of brokers and brokerage firms.