Crowdfunded investments are high risk  

In 2018, Hemi purchased shares in a boutique soda manufacturing company through a licensed crowdfunding provider. Crowd funders act as an intermediary between companies issuing shares and investors who want to purchase shares.

In 2022, Hemi wanted to sell his shares in the soda company. He asked the company whether they would buy back his shares. They declined because it was not their policy to buy back shares and they were in the middle of a capital raise, which the crowdfunding provider were facilitating. The soda company referred Hemi to the crowdfunding provider because they kept a list of interested buyers and sellers for the soda company’s shares.

The crowdfunding provider did not know anyone interested in buying Hemi’s shares. They offered to note down his name and to contact him if anyone expressed interest in his shares.

Hemi complained to the crowdfunding provider that they were not doing more to help him find a buyer for his shares. He asked the crowdfunding provider to offer his shares to the investors interested in the soda company’s capital raise.

The crowdfunding provider were unable to resolve the complaint. They said they were not permitted to approach investors who were interested in the capital raise to offer them Hemi’s shares. They also explained that they do not provide a secondary market for investors to sell their shares.

Hemi asked FSCL to investigate his complaint. He wanted the crowdfunding provider to buy his shares.


Hemi believed the crowdfunding provider effectively had a list of potential buyers for his shares because they knew of investors who wanted to purchase the soda company’s shares through the capital raise. Hemi believed the crowdfunding provider should have disclosed to those investors that his shares were available to purchase, at a cheaper price.

Hemi also believed the crowdfunding provider’s warning statement was misleading. The statement spoke about expecting a secondary market trading facility to be available in the future. Hemi bought his shares in 2018 and there was still no secondary market platform he could use to sell his shares.

The crowdfunding provider said they do not use investors’ interest for a company’s capital raise to solicit the sale of an existing investor’s shareholding. To do so, would undermine the reason for why people expressed their interest to them (to participate in a capital raise) and why the company engaged the crowdfunding provider (to raise capital).

The crowdfunding provider did not accept that their warning statement was misleading. It said shares are difficult to sell.


We concluded that the crowdfunding provider had not done anything wrong.

The crowdfunding provider were under no legal obligation to disclose to investors interested in the capital raise that Hemi’s shares were for sale.

The crowdfunding provider’s warning statement was not misleading or likely to mislead. Hemi was focused on one sentence in the statement but, when read as a whole, it was clear there was uncertainty for investors around whether, in the future, they may be able to sell shares on a secondary market trading platform. Hemi knew, or should have known, in 2018 when he bought his shares, that they may be difficult to sell.


We concluded that Hemi should discontinue his complaint. He did not accept our views but decided not to further pursue his complaint through our process.

Insights for consumers

Companies which use crowdfunding providers to raise capital are usually start-up businesses or small businesses raising capital to expand. Investing in these sorts of companies is high risk. Key risks include that the investor may lose all capital they invested, they may not receive any return on their investment, and they may not be able to sell their shares.