The US regulator of brokerage firms and exchange markets, FINRA, licensed Netcapital as a broker-dealer to facilitate larger fundraises while offering investors a broader spectrum of opportunities.

Private Securities and Business Placements

Netcapital Securities Inc., a subsidiary of Netcapital Inc., can now engage in private securities and referral business placements. This approval enables the company to support equity capital raises under Regulation A and Regulation D.

Beyond facilitating fundraises, the new license enables Netcapital to syndicate deals with other broker-dealers, creating more collaborative investment opportunities.

This development offers issuers access to enhanced fundraising capabilities, particularly for companies pursuing larger-scale equity raises. By aligning with other broker-dealers, Netcapital can broaden the reach and depth of its deal syndications. Additionally, Netcapital Securities Inc. can now charge fees tied to the capital raised under Reg A and Reg D, further strengthening its financial model.

Commenting about the new offering, Martin Kay, the CEO of Netcapital, said: “This is a major milestone for Netcapital, positioning us to expand our offerings and allowing us to better serve our clients by supporting larger capital raises.”

According to the company, this approval will provide investors with a wider array of private equity opportunities. Netcapital plans to partner with multiple broker-dealers to introduce a range of investment options and streamline access to private placements.

Expansion in the Private Markets

Besides this, Netcapital aims to democratize private equity investment and streamline fundraising. The firm’s fintech platform reportedly allows private companies to raise capital online. The addition of broker-dealer operations also enables the company to improve its funding solutions.

Elsewhere, FINRA issued a censure order and penalty of $475,000 against Interactive Brokers in October, accusing it of lapses in its share lending program. The brokerage has already settled with the regulator. The brokerage firm reportedly returned borrowed shares in more than 800 instances, increasing the company's securities deficits.

The regulator also accused the brokerage company of allowing an unregistered associated person to manage software development for its securities finance business, including its securities lending program, between 2021 and 2023. The watchdog mentioned that such a person should have registered with FINRA.