The Securities and Exchange Commission (SEC) has ordered Nigerian fintech platform, Crowdyvest to stop all investment activity that involves soliciting investments and deposits from the public pending registration.
This directive was initiated as a result of the proposed launch of a Halal Fund by the company. According to the commission, Crowdyvest is an unregistered entity purporting to operate as a corporative society.
The Commission has issued a Cease and Desist Order to Crowdyvest to stop the launch and operations of the Crowdyvest Halal Fund and any other investment activity which involves soliciting investments and deposits from the public.
Crowdyvest has responded to a Technext inquiry into the matter. According to a spokesperson, Adeyemi, the company is aware of the development and is doing all it can to ‘play by the rules’.
Yes, we are aware of this. There’s been an active engagement with SEC on this matter, we understand SEC’s stand and powers in regulating the space and we are doing all required to play by the rules to the good of all.Crowdyvest
Adeyemi, however, noted that Crowdyvest is a registered ‘cooperative society’ that can take funds and invest on behalf of its members. He said this info is obtainable from the company’s website as well as the bye-laws of the society.
Recall that upon Crowdyvest’s transition from crowdfunding into a financial management platform, the company noted that it was going to run a system of closed membership, starting with about 10,000 subscribed members already on its platform. Is the company, perhaps, banking on its status as a cooperative society for exclusion from SEC’s regulation?
“Technically, yes, it excludes us from the SEC regulation. We operate like every other registered and well operated cooperative society and our approach is digital,” Adeyemi replied.
He also said the company has nonetheless maintained active engagement to make sure the situation is resolved quickly.
SEC’s June 30 Deadline
The background of the cease-and-desist order is the new registration requirement for crowdfunding platforms that was announced by the commission last month.
According to the report, Fintechs like Piggyvest and Crowdyvest are mandated to comply with its terms before June 30 or stop operating if they are unable to meet the requirements.
However, the proposed launch of the Halal fund by Crowdyvest instigated a direct response by the commission.
For crowdfunding companies, the SEC regulations says that only an MSME incorporated in Nigeria with a minimum operating track record of two years can raise funds through a crowdfunding portal operated by a registered crowdfunding intermediary.
It added that the fundraising limit for Medium enterprises are set at ₦100 million on each platform, while the limit for small enterprises is set at ₦70 million. Micro-enterprises can only raise a maximum of ₦50 million.
SEC’s new order basically means Crowdyvest will probably have to suspend most of its operations till they meet its requirements.
The company recently moved from its crowdfunding model to a go-to digital wealth management and savings platform. This means there are other products the company might be able to offer pending a resolution.
A list of authorised Halal Funds and other mutual funds can be found on the website of the Commission
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