Earlier this month, the UK's Financial Conduct Authority published a paper, "A review of the regulatory regime for crowdfunding and the promotion of non-readily realizable securities by other media" (you may access the paper here: http://www.fca.org.uk/static/documents/crowdfunding-review.pdf), which provides a post-implementation review of the market following the April 2014 effective date of regulations. For 2014, the report notes that loan-based crowdfunding grew almost three-fold from 2013 to 2014, reaching approximately GBP 1.3 billion in loans. Small business loans comprised the majority of the market. Equity crowdfunding remains smaller, though it is growing rapidly. The report notes approximately 200% growth from 2012 to 2014, with nearly GBP 84 million raised in 2014. The report comments on the FCA's market supervision, noting the FCA's registration process and its review of websites used by crowdfunding platforms. The website and advertising review highlights a number of recurring issues, such as a lack of balanced disclosure, insufficient or misleading information, cherry picking of information, etc. The report concludes that despite these deficiencies, the FCA does not see a need to change its regulatory approach and will continue to monitor the fast-growing market. The regulatory approach and the findings related to communications may be instructive to state regulators in the United States who have moved forward with crowdfunding regulations in their states.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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