Licence of crowdfunder suspended. Photo / supplied
Licence of crowdfunder suspended. Photo / supplied
Te Mana Tātai Hokohoko The Financial Markets Authority has suspended the licence of a crowdfunding business, The Property Crowd, which contravened its obligations.
Paul Gregory, acting capital markets director, said the business might not be able to effectively perform the services under its licences and had materially contravened licensee obligations.
The Property Crowd got its licence in October 2018 but had not hosted a successful offer since then and no investors use its platform.
But in January 2021 Singapore-based Property Strata Pte bought 75 per cent of the shares and signalled an intention to relaunch its service, his statement said.
“Ongoing non-compliance shows TPC has a poor understanding of its regulatory obligations and the ongoing lack of information from TPC hinders the FMA from effectively carrying out our supervisory functions. So, investors cannot make informed decisions about whether to invest on TPC’s platform and their money could be at risk,” Gregory said today.
Licence suspension was a “significant step”, he said.
“But we concluded it was the appropriate response to TPC’s overall pattern of compliance issues, while giving TPC the opportunity to demonstrate effective compliance and re-enter the market,” he said.
The company had provided the authority with a preliminary remediation action plan for improving compliance. That will be worked through before any relaunch.
It had been co-operative throughout this process, Gregory noted.
Yet it had breached the standard conditions of its licence and legal requirements by filing certain financial reports late. It was deregistered from the Financial Service Providers Register for failing to file its annual return.
Yet crowdfunding licensees are required by law to be registered on that register.
It also failed to provide the authority with sufficient information about how it would improve its systems, processes and documentation to prevent further issues.
The company’s website says it’s headquartered at Takapuna at Smales Farm’s B:Hive office building, 72 Taharoto Rd.
B:Hive's stairs are a central feature. Photo / John Gollings
It describes itself as a real estate investment firm and its directors are Singapore’s Bruce Lynn Musick and Dairy Flat’s Lachlan Sherwood Sloan, according to the Companies Office.
“We aim to make real estate investment easy, efficient, transparent and accessible,” the company says.
People could invest by buying a fractional ownership share of a real estate investment.
“Rather than purchase a property outright, when you invest with us, you buy property shares... shares in a company that owns a property. Our platform under development aims to enable Kiwis to invest and get on the property ladder at a fraction of the total investment they would have to if they owned direct,” the business says.
People “like you” would buy shares in a holding company which owns a property. Investors would get their share of monthly rental income and benefit from potential capital growth.
Shares could be sold via the resale market, The Property Crowd says.
“Get on the property ladder without the need for a large deposit. Be one of the first to get informed once we have our first opportunities,” the business says, inviting people to send emails and messages.
The Property Crowd says it wants to buy Auckland properties worth around $2m and confidential appointments can be made to arrange a potential offer.
Warning statements about equity crowdfunding say it’s risky and very speculative.
“You may lose your entire investment and must be in a position to bear this risk without undue hardship,” The Property Crowd says online under the Financial Market Conduct Regulations.
Comment has been sought but not yet received from The Property Crowd.
