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Crowdcube told to repay investor in landmark compensation case

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A crowdfunding platform has been ordered to repay an investor over an “at best unclear, and at worst misleading” fundraising pitch in a decision that could result in the industry being hit by a series of compensation claims.

The Financial Ombudsman Service told Crowdcube to repay an unnamed retail investor his £18,000 stake in Zing Zing, a Chinese takeaway start-up, after ombudsman Ben Waites concluded that the service failed to tell prospective investors it knew the company’s expansion plans were unsubstantiated.

Experts said the “landmark” decision would encourage investors to seek redress over misleading pitches and force the crowdfunding industry to raise its due diligence standards.

Regulated crowdfunding platforms allow companies to sell equity stakes to the public and professional investors through an online platform.

 

 

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