Lee on Investor Protection on Crowdfunding Platforms

Joseph Lee (School of Law, University of Manchester) has posted “Investor Protection on Crowdfunding Platforms” (The EU Crowdfunding Regulation, OUP) on SSRN. Here is the abstract:

This paper discusses the protection of investors on crowdfunding platforms under the Crowdfunding Regulation. Although there are many provisions in the regulation that protect investors, this paper concentrates specifically on those included under the heading of Caper IV ‘Investor protection’ of the Crowdfunding Regulation.

This paper focuses on how investor protection can contribute to the objectives of crowdfunding and, in particular, how the provisions of the Crowdfunding Regulation serve this purpose. To this end, Section 2 discusses the investor-focused objectives of crowdfunding, and the role that technology can play in realising these objectives. Section 3 considers the meaning of investor protection within the scope of the Crowdfunding Regulation, and identifies areas where the current regime might be extended in the future. Section 4 discusses the categorisation of investors and the relevance thereof for the investor protection. Major provisions pertinent to investor protection are subsequently discussed in Sections 5 to 9, including the information to be provided to clients, default rate disclosure, the entry knowledge test and the simulation of ability to bear loss, the pre-contractual reflection period, and the key investment information sheet. The Sections also contain reflections pertinent to the different topics discussed in order to put them in a greater context. Section 10 concludes.