FCA Cracks Down on Unregulated Share Offers as Odin Pauses Crowd Investments

The Financial Conduct Authority (FCA) is taking action against unregulated firms that facilitate investment deals for private companies without proper regulatory permissions. This move comes as entrepreneurs increasingly turn to online services and social media to seek funds from investors.

Odin, a service that helps private companies pool investments, has been instructed by the FCA to pause onboarding new customers until it changes its operating model. The company claims that its third-party legal advice indicated compliance with regulations, but the FCA has taken a different view. Odin maintains that it provides administrative software and services to investors and entrepreneurs who would often conduct these deals independently, such as through lawyers and email.

The UK Crowdfunding Association has expressed concern over the alarming rise in the number of founders seeking to raise finance directly from the public via seemingly unregulated share offers. Bruce Davis, a founding director of the association, warns that founders considering an unregulated investment offer risk breaking the law, facing up to two years in prison, and becoming personally liable for any monies raised illegally, including potential damages paid to investors who lost money.

The FCA emphasises that promoting financial services without the approval of an authorised person is potentially criminal. Investors should ensure they understand the opportunity and risks involved and check the FCA register to confirm they are dealing with a regulated financial firm.

Odin acknowledges that some customers are annoyed by the disruption but assures that it will fix the issue as quickly as possible, expecting to be back online within weeks.

As the regulatory landscape evolves, it is crucial for companies and investors to remain vigilant and adhere to the FCA’s guidelines to protect themselves and maintain the integrity of the investment market.

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crowd investmentsFCA regulationsinvestor protectionOdinUK Crowdfunding Associationunregulated share offers