Crowdfunding

Recent Articles

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  06.05.2021

  A look of dis­ap­prov­al: the FCA’s new dis­cus­sion pa­per on fin­an­cial pro­mo­tions rules for high-risk in­vest­ments and firms ap­prov­ing fin­an­cial pro­mo­tions

  1. Classification of high-risk investments Background At present, the FCA rules relating to financial promotion classify investments into the following categories: readily realisable securities (“RRSs”), which are generally marketed to retail investors without restrictions; non-readily realisable securities (“NRRSs”) and peer-to-peer (“P2P”) agreements, which carry restrictions on the direct offer of financial promotions; and non-mainstream pooled investments (“NMPIs”) and speculative illiquid securities (“SISs”), which cannot be mass-marketed...

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  11.12.2020

  FCA con­firms fi­nal rules for ban on mar­ket­ing of spec­u­lat­ive il­li­quid se­cur­it­ies, such as “mini-bonds” to re­tail in­vestors

  In summary, the final rules: 1. allow the marketing of speculative illiquid securities to retail investors only when they are classified as: a. certified sophisticated investors, or b. certified high-net worth investors and self-certified sophisticated investors, where the product has been pre-assessed as likely to be suitable for a particular investor; and 2. require any marketing material produced or approved by an authorised firm to include a specific risk warning, and disclosures of any costs or payments to third parties that are deducted from the money raised from investors. Broadly, “speculative...

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  03.11.2020

  Busy Times in FinTech: Out­line of Re­cent Reg­u­lat­ory De­vel­op­ments - Part 2

  New EU-wide rules for crowdfunding platforms On 5 October 2020, the European Parliament adopted a new crowdfunding Regulation which will give crowdfunding platforms the ability to become authorised in one EU member state and passport throughout the EU, complying with only one set of rules. EU member states will not be able to impose additional requirements on platforms operating under the Regulation nor require them to have an establishment in that member state. The new rules, which will enter into force on 10 November 2021, apply to all European Crowdfunding Service Providers (ECSPs) that raise...

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  18.06.2020

  FCA pro­poses per­man­ent ban on mar­ket­ing mini bonds

  In summary, the Consultation Paper proposes to: Extend the current ban on the marketing of speculative illiquid securities (“SISs”) (including speculative mini-bonds); and Amend and clarify the temporary product intervention rules relating to SISs, including by expanding its scope to include certain types of listed bonds. Permanent ban on marketing SISs As mentioned in our article last year on the topic, the temporary ban on SISs was set to expire on 31 December 2020. The FCA has now proposes to make these rules permanent so that, in short any financial promotions in relation to...

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  26.11.2019

  FCA bans mar­ket­ing of spec­u­lat­ive mini-bonds to re­tail in­vestors

  In line with the FCA’s ongoing efforts to prevent consumer harm, in summary it has implemented the following temporary rules designed to strengthen its requirements on financial promotions: Restricting the marketing of speculative illiquid securities to sophisticated or high-net worth retail investors only and where the product has been pre-assessed as likely to be suitable for them; and Requiring any marketing material produced or approved by an authorised firm to include a specific risk warning, and disclosures of any costs or payments to third parties that are deducted from the money...

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  19.08.2019

  On­line Plat­forms: "Walk­ing" the line between leg­al and fin­an­cial ser­vices com­pli­ance ( Part 5 of 5)

  The AML requirements set out under the MLRs create a number of obligations which would apply to regulated online platforms including: creating internal policies and procedures; carrying out internal risk assessments; creating a system for suspicious activity reporting; training staff; carrying out customer due diligence (“CDD”), enhanced due diligence (“EDD”), or simplified due diligence where necessary; and record keeping. Online platforms commonly implement some of the following measures to meet AML obligations: filtering customers to avoid “high risk” customers...

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