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How to Properly Reject Deals With Compliance Issues

Overview​

As a broker on the WhiteLabel Community Deals Platform, there will be times when you need to reject deals that don't meet regulatory requirements or platform standards. Properly rejecting non-compliant deals is crucial for maintaining marketplace integrity, protecting investors, and upholding regulatory standards. This guide will walk you through the process of rejecting deals in a professional, clear, and constructive manner.

Prerequisites​

Before rejecting a deal, you should:

  • Have an active broker account on the platform
  • Have thoroughly reviewed all deal details and documentation
  • Have identified significant compliance issues that cannot be easily remediated
  • Have attempted to request modifications if the issues were potentially fixable
  • Be prepared to clearly explain the reasons for rejection
  • Understand the platform's rejection process and tools

Step-by-Step Instructions​

Step 1: Confirm Rejection Is Necessary​

  1. Before proceeding with rejection, verify that:

    • The compliance issues are serious enough to warrant rejection
    • The issues cannot be reasonably fixed through modifications
    • You've given the issuer adequate opportunity to address concerns
    • You've consulted with colleagues or legal counsel on complex cases (if appropriate)

  2. Document your reasoning for determining that rejection is necessary

Step 2: Access the Deal Rejection Interface​

  1. From the Broker Dashboard, access the pending deal you need to reject
  2. On the Deal Approval page, locate the action buttons at the top right
  3. You'll see options including "Reject," "Comment," and "Approve"

Step 3: Prepare Your Rejection Rationale​

  1. Before clicking the "Reject" button, prepare a clear explanation of:

    • The specific compliance issues that led to rejection
    • Which regulations or platform policies were not met
    • Why these issues are significant enough to warrant rejection
    • Whether resubmission with major changes might be possible in the future

  2. Be specific, factual, and professional in your explanation

  3. Focus on the deal's issues rather than making it personal

Step 4: Click the Reject Button​

  1. Click the "Reject" button on the Deal Approval page
  2. This will typically open a rejection dialog or form
  3. The system may ask you to confirm your decision

Step 5: Document Rejection Reasons​

  1. In the rejection dialog:

    • Enter your detailed rejection rationale
    • Be clear, specific, and professional
    • Reference relevant regulations or platform policies
    • Provide enough detail for the issuer to understand the decision

  2. Example of a well-structured rejection rationale:

    This deal is being rejected due to the following compliance issues:

    1. Inadequate risk disclosures: The offering documents fail to adequately 
       disclose material risks related to the business model and industry, 
       as required under Regulation D Rule 506(b).

    2. Inconsistent financial projections: The financial statements contain 
       significant inconsistencies between the income statement and cash flow 
       projections, raising concerns about the accuracy of the information 
       provided to potential investors.

    3. Unverifiable claims: The marketing materials contain multiple statements 
       about market position and competitive advantages that lack substantiation 
       and could potentially mislead investors.

    These issues represent significant compliance concerns that could not be 
    adequately addressed through modifications. Any future submission would 
    need to completely address these fundamental issues.

Step 6: Provide Educational Context (When Appropriate)​

  1. When helpful, include educational information about:

    • The specific regulations that apply
    • Why these regulations exist to protect investors
    • Common industry standards or best practices
    • Resources that might help the issuer understand requirements

  2. This helps issuers understand the broader context of your decision

Step 7: Indicate Resubmission Possibilities​

  1. Clearly state whether:

    • Resubmission is possible after major revisions
    • The deal has fundamental flaws that make it unsuitable for the platform
    • There are specific conditions that would need to be met for reconsideration

  2. Be honest but not unnecessarily discouraging if improvements could make the deal viable

Step 8: Submit Your Rejection​

  1. Review your rejection rationale for clarity, professionalism, and completeness
  2. Click "Submit" or "Confirm" to finalize the rejection
  3. The issuer will be notified according to their notification settings

Step 9: Document the Rejection in Your Records​

  1. For your own records, document:

    • The date and time of rejection
    • The specific compliance issues identified
    • Any communication with the issuer about these issues
    • The final rejection rationale provided

  2. This documentation helps with:

    • Future regulatory inquiries
    • Consistency in decision-making
    • Process improvement

Step 10: Handle Post-Rejection Communication​

  1. After rejection, be prepared to:

    • Respond to issuer questions about the decision
    • Provide additional clarification if needed
    • Maintain a professional tone throughout all communications
    • Stand firm on compliance requirements while being respectful

  2. Direct the issuer to appropriate resources if they wish to learn more about compliance requirements

Best Practices​

  • Be Clear: Provide specific, detailed reasons for rejection
  • Be Factual: Base rejection on objective compliance issues, not subjective opinions
  • Be Educational: Help issuers understand the regulatory context when appropriate
  • Be Consistent: Apply the same standards to all deals
  • Be Professional: Maintain a respectful, constructive tone even when rejecting
  • Be Thorough: Document all aspects of your decision-making process
  • Be Timely: Process rejections promptly once you've determined they're necessary
  • Be Helpful: Provide guidance on whether and how resubmission might be possible
  • Be Firm: Don't compromise on important compliance standards
  • Be Balanced: Acknowledge positive aspects of the deal when appropriate

Troubleshooting​

Common Issues​

  1. Issuer Disputes Rejection

    • Solution: Refer to specific regulations or platform policies that weren't met
    • Solution: Provide additional explanation of compliance requirements
    • Solution: Suggest a call or meeting for complex situations
    • Solution: Involve legal counsel or compliance experts if necessary

  2. Difficulty Articulating Rejection Reasons

    • Solution: Consult with colleagues on how to clearly explain complex issues
    • Solution: Reference similar past cases and how they were handled
    • Solution: Use a structured format to organize your rejection rationale
    • Solution: Focus on the most significant issues rather than listing every minor concern

  3. Concerns About Issuer Relationship

    • Solution: Emphasize that rejection is about the deal, not the issuer
    • Solution: Maintain a constructive, educational approach
    • Solution: Offer guidance on how future deals might meet requirements
    • Solution: Consider having a senior team member involved in communication

  4. Uncertainty About Rejection vs. Modification

    • Solution: Consider if the issues could reasonably be fixed with modifications
    • Solution: Assess the extent and fundamental nature of the compliance problems
    • Solution: Evaluate the issuer's responsiveness to previous feedback
    • Solution: Consult with colleagues on borderline cases

  5. Platform Limitations in Rejection Process

    • Solution: Use the comment function to provide additional context if needed
    • Solution: Document any system limitations in your internal records
    • Solution: Suggest improvements to the platform's rejection workflow

Getting Help​

If you encounter challenges during the rejection process:

  1. Navigate to the /support Support center by clicking on the "Support" link in the main navigation
  2. Select the appropriate category for your issue
  3. Provide specific details about your challenge
  4. Submit your support request
  5. Support staff will respond through the platform's notification system