R4 Capital Funding LLC agreed to pay a $100,000 penalty to help settle an administrative proceeding brought by the Securities and Exchange Commission, which found that the New York-based business acted as an unregistered broker in connection with municipal bond offerings for multifamily housing projects. 

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From at least June 2020 to December 2025, respondent R4 Funding, a Delaware limited liability company formed in December 2015, provided broker services to four institutional investors in relation to 31 muni bond offerings, according to an Aug. 21 SEC order. 

“During the relevant period, respondent acted as an unregistered broker in connection with 31 municipal bond offerings that raised over $1.16 billion to finance 27 low-income multifamily housing development projects,” the order said. 

R4 Funding “was not registered with the commission in any capacity when it provided these services,” the SEC said in its order. By engaging in unregistered broker activity, R4 Funding violated the broker-dealer registration requirements of Section 15(a)(1) of the Securities Exchange Act of 1934, the order said. 

R4 Funding agreed to settle without either admitting or denying the SEC’s findings. In addition to the $100,000 civil penalty, the commission ordered that “R4 Funding cease and desist from committing or causing any violations and any future violations of Section 15(a)(1) of the Exchange Act.” 

To find potential muni bonds for its investor clients to buy, R4 Funding worked directly with the developers of those projects. In certain cases, a developer approached R4 Funding with an opportunity to finance a specific multifamily housing development. In other instances, R4 Funding responded to a request for financing proposals for a specific multifamily project. Muni bonds were part of the proposed financing in each case, according to the order. 

The broker services R4 Funding provided included: Negotiating the structure and pricing of the muni bonds with project developers; soliciting investors to buy the bonds; and providing advice to investors concerning the merits of the bonds, the SEC said. 

In connection with each issuance of muni bonds, R4 Funding received transaction-based compensation in the form of an origination fee, which was calculated as a percent of the principal amount of the bonds at closing, according to the order. 

For instance, in October 2024, R4 Funding facilitated financing for the construction of a multifamily affordable housing development located in Arizona. The financing included issuance by an Arizona county development authority of tax-exempt multifamily housing revenue bonds. R4 Funding placed all the bonds with a single institutional client, and the proceeds of the bonds were loaned to the developer to fund the development’s construction.

“Respondent negotiated the terms of the bonds with the developer and signed a term sheet with the developer setting out the transaction terms and conditions to closing,” the SEC’s order said.  “Among other things, respondent solicited its investor client to purchase the bonds from the issuer and conducted due diligence on the property and the developer.” 

R4 Funding was paid an origination fee of 0.75% of the principal amount of the bonds for the Arizona development at closing. 

Similarly, R4 Funding in June 2020 facilitated the financing for construction of a multifamily affordable housing development project located in Texas. That financing included two series of multifamily housing revenue bonds – one tax-exempt, the other taxable – issued by a Texas public facility corporation. 

R4 Funding placed both series of the bonds with a single institutional client, the SEC’s order said, adding that bond proceeds were loaned to the developer to fund the development’s construction. 

“Respondent negotiated the terms of the bonds with the developer and signed a term sheet with the developer setting out the transaction terms and conditions to closing,” the SEC’s order said.  “Among other things, respondent solicited its investor client to purchase the bonds from the issuer and conducted due diligence on the property and the developer.” 

R4 Funding was paid an origination fee of 1.25% of the principal amount of the bonds for the Texas project at closing, the order said. 

In determining to accept R4 Funding’s settlement offer, “the commission considered the cooperation afforded to the commission staff and remedial steps promptly undertaken by R4 Funding, including its ongoing efforts to become registered as a broker-dealer,”  the order said. 

R4 could not be reached for comment.