Paper slaps warning on equity crowdfunding

A discussion paper with draft Financial Markets Conduct Act regulations, recently released by the Ministry of Business, Innovation and Employment, proposes a warning for investors who may use crowdfunding services.

The paper includes a condition for crowdfunding service providers to make a warning statement available as part of the market services license to provide the service, on the home page of their website or on the page on the site immediately before the investor uses the site to apply for or acquire financial products, and prominently displayed on application forms for acquiring financial products using the service.

The warning statement must be in the following form, the regulations propose:

“Equity crowd funding is risky.

“You may lose your entire investment, and must be in a position to bear this risk without undue hardship.

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