Earlier this month, Equitise, a securities crowdfunding platform operating in New Zealand and Australia, received an “infringement notice” from the New Zealand Financial Markets Authority (FMA). According to the FMA, Equitise had failed to file its financial statements prior to the deadline, among other concerns about the platform.
The FMA noted that Equitise was licensed by the FMA as an equity crowdfunding service provider in December 2014 and is required to file audited financial statements by 30 October every year. The FMA stated that this is the 3rd year in a row the platform has failed to file the necessary documents. The FMA’s new infringement notice required Equitise to pay a $7,500 penalty.
Following the infringement notice, Equitise was notified by the FMA that its crowdfunding license had been canceled. The FMA reported the license had been pulled on April 3, 2024.
The FMA stated:
- Equitise materially breached certain market services licensee obligations;
- A material change of circumstances occurred in relation to Equitise’s license, and
- Equitise no longer meets certain statutory requirements, including the requirement that it is capable of effectively performing its crowdfunding service, and there is no reason to believe Equitise is likely to breach its licensee obligations.
And:
- Equitise failed to provide its financial reporting and agreed-upon procedures reporting;
- Equitise had been deregistered from the Financial Service Providers Register (FSPR); and
- Equitise had a history of non-compliance with various legislative and other obligations.
The FMA stated that Equitise was deregistered from the FSPR for failing to file its annual confirmation within the required timeframe. Despite being deregistered, Equitise continued to provide crowdfunding services, facilitating two offers, which it was not able to do lawfully following its deregistration.
Peter Taylor, FMA Director of Specialist Supervision and Response, said the revocation of a license is one of the strongest actions the regulator can take and something they do not take lightly.
“Financial service providers must make sure they are able to meet the legislative requirements and act lawfully. The rules are there to protect consumers and to ensure market integrity.”
Equitise first launched in New Zealand and then set up operations in Australia following updated legislation that enabled online capital formation. The platform was one of the first firms to offer crowdfunding and the first issuer of a securities offerings. The company touted the sophistication of its backers. According to its website, over $63 million has been raised from 82 offerings since its inception. It was not immediately clear if these numbers were from both markets combined. Currently, there are two securities offerings that display a coming soon notice but it is not clear if these offerings will go live. Equitise leveraged its own platform to raise funding to operate the platform.
It was not immediately clear if the Australian operations would continue. Equitise’s registration with ASIC is current. An email sent to the platform bounced.
