Property Crowd hits trouble
Investors who sunk money into a property investment crowdsourcing company that inadvertently misled them are being given the chance to withdraw their cash.
Founded by Jim Janse, The Property Crowd opened for business yesterday with a plan to set up companies to buy individual houses, and then sell shares in those companies to people who wanted a stake in the housing market, but could not afford a house of their own.
The company told investors they would be able to exit the investment by selling their shares on a secondary market managed by The Property Crowd despite the company not having been given approval by the Financial Markets Authority to run one.
The FMA said The Property Crowd would offer investors the chance to withdraw from the investment.
‘‘The launch of the offer this morning with references to the secondary market follows a misunderstanding by The Property Crowd about the status of its application,’’ the FMA said.
‘‘The Property Crowd has made an application to the FMA to offer a secondary market in its crowdfunding offers. To offer this service requires an adjustment to the terms and conditions of its current equity crowdfunding licence. However, approval has not yet been granted.’’
‘‘Following engagement with the FMA, the firm has cooperated and responded to the FMA’S concerns about this offer and statements on its website. Subsequently, a number of changes have been made to the website in regard to its claims about a secondary market.’’
‘‘All investors who invested based on an earlier form of the website will be contacted by Property Crowd and offered the chance to withdraw.’’
The Property Crowd’s application to operate a secondary market remained under consideration by the FMA. Janse apologised for his error.
‘‘What happened was that we received news last month that our application was progressing towards formal approval. In my excitement I mentioned that we’d been approved when in fact we’re still in the process of gaining final approval.’’
‘‘I’ve apologised to the FMA,’’ he said.
Janse remained hopeful that the permission would be granted, and confirmed that the regulator had not told The Property Crowd to cease its capital-raising efforts to purchase a house in Auckland.