Investment Process #
Emails:
- investment/confirmed.pug - Required by law/SEC
flowchart TD A[User starts investment] --> B(Investment Amount Selection) B --> C(Investment Profile Selection) C --> D(Agreement e-Signature) D --> E(Payment Method Selection) E --> F(Review and Confirm) F --> G([LAW REQUIRED EMAIL : CONFIRMED INVESTMENT]) F --> H{{Identity Verification}} F --> I{{Accreditation Verification}} H --> J{Approved?} I --> J J -->|No| K{{Investment Cancellation}} J -->|Yes| L(LEGALLY CONFIRMED INVESTMENT) L --> M(Payment process is initiated) M --> K M --> N[Investment Finalization]
Step 1: Investment Amount Selection
The investor begins by specifying the amount they wish to invest.
The platform provides a range of possible amounts with guidance or minimum requirements for each type of investment.
Step 2: Investment Profile Selection
After selecting an investment amount, the investor chooses an investment profile. To ensure compliance throughout the investment process, the platform will verify that the chosen profile matches the necessary accreditation status. Accreditation is optional during the process but must be completed for the investment to transition to a “Confirmed” status.
Also the SEC requires financial institutions to gather a client’s name, date of birth, address, and identification numbers before opening an investment account. So the KYC/AML checks are to be at least started (pending status) before initiating the investment process. But it is required to be successfully passed for the investment to transition to a “Confirmed” status.
The KYC/AML requirements are in accordance with the USA PATRIOT Act of 2001 ( learn more about KYC), while the accreditation verification is a requirement under the SEC regulations for Reg D 506(b) and Reg D 506(c) offerings ( read more about Regulation D).
Step 3: Agreement e-Signature
The investor reviews the investment agreement terms and then digitally signs the document to formalize their commitment. The platform tracks and securely stores the signed document for future reference. During and after the investment, the investor can access and review the document at any time.
In accordance with the SEC regulations, the platform ensures that investors can access their signed investment agreements for at least 5 years, even if the company undergoes bankruptcy, ceases operations, or experiences technical failures. To guarantee this long-term availability and security, we utilize third-party services that assume responsibility for document storage and retrieval. You can find the SEC’s general recordkeeping rules here.
Step 4: Payment Method Selection
Once the agreement is signed, the investor proceeds to the payment page where they can select from various payment options (e.g., ACH transfer,
Electronic Wallet like Dwolla, WIRE transfer). The available payment methods are displayed based on the investor’s profile selected in Step 2. At this stage, the platform securely collects and processes payment information.
In compliance with FINRA guidelines, we follow the NIST 800-63B standards for handling sensitive data. While this standard provides general recommendations for data security, it leaves some ambiguity regarding the exact requirements for storing sensitive information. In the event of a data breach or improper handling of sensitive data (such as unauthorized access to banking information), there could be significant legal and financial consequences for the platform. To mitigate such risks, we never store sensitive data directly on our platform. Instead, we rely on trusted third-party partners to handle and secure payment information, ensuring both compliance and the protection of investor data.
Step 5: Review & Confirm
Once the payment information is submitted, the investor is presented with a summary of their investment details for final review. This overview includes the investment amount, selected profile, signed agreement, and chosen payment method. This serves as the investor’s last opportunity to verify all details before final confirmation by clicking the “Review and Submit” button. The platform allows for adjustments or cancellations before final submission to ensure complete accuracy.
As required by FINRA regulations, the platform ensures that the investor has fully reviewed and confirmed their investment details before proceeding. Additionally, a legally required investment confirmation email is automatically sent upon final submission to provide the investor with official documentation of the commitment.
Post-Step: KYC & Accreditation Verification
The investor’s KYC and accreditation status are verified by a third-party provider specializing in identity verification and accreditation. This process ensures the investor meets all required qualifications before the investment can proceed. Once the investor is accredited, the third-party service sends a confirmation, which triggers the
payment process to move forward. Reg D requires Investors’
funds protection by holding them in escrow during the campaign. By leveraging our escrow agent solution, we guarantee that funds are securely managed and processed, ensuring seamless operations even in challenging edge cases. The escrow agent releases funds, when offer is
successfully closed. Also note that there are (pre-)closing situations like
offer cancellation,
early closing,
material change and
unsuccessful closing.
In compliance with SEC regulations, both accreditation verification and the email notification are mandatory. Upon successful accreditation, the platform automatically sends an official email notification to the investor. Additionally, an in-app notification is provided as an extra measure to ensure the investor is fully informed and aware of their investment status. This step demonstrates the platform’s commitment to applying maximum efforts to ensure investor awareness and regulatory compliance at every stage of the process.
Our email-service has integration with the trusted delivery and marketing platform which ensures security, compliance, and deliverability. It obust encryption and regulatory compliance (FINRA), protecting sensitive financial data and minimizing the risk of phishing or email spoofing. Additionally, third-party providers handle scalability, uptime, and automation, ensuring timely communication during high traffic periods and streamlining customer notifications.
Notice: Provider Variability and Compliance Assurance
Please be advised that, depending on customer preferences, the specific providers involved in the investment and related processes, including identity verification, accreditation checks, electronic wallet provision, email communications, and other related services, may vary. However, rest assured that all such providers are carefully selected to meet the highest standards of security, compliance with applicable laws and regulations, and user experience best practices.
Each provider undergoes a rigorous vetting process to ensure they align with our commitment to safeguarding your personal and financial information. We prioritize full adherence to regulatory requirements, ensuring that your investment experience remains secure, compliant, and seamless.
Test Cases
All processes on our platform are thoroughly documented, including detailed test cases, which are especially critical whenever changes are made. Test cases ensure that every feature functions as intended, identify potential issues early, and maintain the platform’s reliability, security, and compliance for our investors.
Related Use-Cases: