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The Financial Markets Authority (FMA) has announced that it has issued a formal warning to Crafters & Co Limited (Company Number: 4350380) (Crafters) and its sole director Hadleigh Petherick under s 9 of the Financial Markets Authority Act 2011.
On 18 November 2015, Crafters launched a crowdfunding campaign on the PledgeMe Limited (PledgeMe) platform. During the campaign questions were raised by PledgeMe relating to Crafters’ solvency, following which the campaign was withdrawn by Crafters. No investor money was received by Crafters as a result of this withdrawal.
PledgeMe referred this matter to the FMA.
In the FMA’s view the offer information used by Crafters as part of the crowdfunding campaign contained misleading and deceptive statements relating to the stated valuation of Crafters, the assets that Crafters claimed to hold, and the solvency of Crafters at the time of the campaign.
Part 2 of the Financial Markets Conduct Act 2013 provides that a person, in trade, must not engage in conduct that is misleading or deceptive or likely to mislead or deceive in relation to any dealing in financial products. These provisions apply to offers of shares made through crowdfunding platforms even though these offers are less regulated and there is no requirement for investors to be given all information that may be important to their investment decision.
Accurate and reliable representations of a company are an essential component of any investment, including crowdfunding, and ensure that potential investors are able to rely on statements made by entities they are considering investing in.
Before making any decision to invest in a crowdfunding campaign, the FMA encourages prospective investors to conduct their own research into the potential investment, including understanding what background checks the particular platform provider conducts on entities raising money on their platform.