FCA Regulates Social Media Promotion for Equity Crowdfunding

FCA Regulates Social Media Promotion for Equity Crowdfunding

Financial services in the UK have waited months for the FCA’s updated
guidelines regarding social media promotion. Now that the regulatory
body has released its directives, however, crowdfunders are less than
pleased. According to a recent Times article,
the FCA asks equity crowdfunding portals to include risk warnings in
all social media interactions to ensure that investors acknowledge all
risks involved.


In reaction to this development, industry leaders proclaim that this
rule will limit startups in how they can discuss and solicit funding
rounds. As Jeff Lynn, co-founder of Seedrs, comments, “It doesn’t make
sense for every tweet to have a full risk warning.” Barry James, founder
of The Crowdfunding Centre, agrees: “There are full risk warnings once
you click through [to a site], way before anyone can consider parting
with any cash.” Such an argument emphasizes the fact investors do not
transact via social media, suggesting that the regulation is misguided.