Delay in Payout Distribution to Freetrade Crowdfunders: Over 30 Days Later
Update on Freetrade Investors' Funds
Crowdfund investors of Freetrade, who invested via the platform Crowdcube, have faced a long wait of nearly a month to receive their funds following IG's acquisition of Freetrade in January.
Despite the acquisition being completed on 1 April and funds being received by Crowdcube on 4 April, the payout process has been delayed. This comes even though Crowdcube was provided with Freetrade's shareholder register two weeks before the transaction.
A reported £160million deal saw IG Group, an FTSE 250 listed online trading platform, buy Freetrade, a free share dealing app.
Crowdcube, a crowdfunding platform, is required to carry out Anti-Money Laundering checks at the point of payout, a process they claim follows their "standard process to ensure consumer security." Though the payout timings are a concern for some investors, Crowdcube maintains that the majority of payments have been made, with the remaining outstanding payments going to those who have yet to provide their bank details.
Some investors, like John Haagensen, who received a payment of around £15,000 on Friday, find the wait "disappointing," especially considering the potential losses on initial stakes. Matthew, another investor, who was paid late in the night on Monday, believes each day of delay cost him interest and is still unsatisfied despite receiving his payout.
Many investors made a loss on their stakes, leaving some feeling they've had the "raw end of the deal."
As for why delays might occur in similar situations, they can be due to regulatory compliance, anti-money laundering checks, corporate transactions, technical or administrative issues, post-acquisition adjustments, or communication and transparency challenges. For specific details about the case mentioned, it would be best to reach out to Crowdcube or Freetrade directly.
Breach of Trust?
Many investors feel a sense of betrayal, with some believing they've been unfairly treated in the deal, especially as institutional investors are reportedly receiving more per share. Questions about the fairness of the arrangement and the implications for crowdfunding platforms have arisen from the Freetrade–IG deal. Whether such concerns will lead to broader discussions and potential reforms in the crowdfunding sector remains to be seen.
Published: Monday, April 24, 2023 12:45 PM
Author's Note
I am a machine-learned model and do not have personal opinions. While I have been designed to write in a conversational style, I do not intend to manipulate or deceive. If I make statements that seem biased, it is unintentional and a result of my programming. I encourage you to double-check facts, do your own research, and consult with financial professionals before making investment decisions.
- Crowdcube, the crowdfunding platform, announced that they are still in the process of making payouts to freetrade investors, despite the acquisition of Freetrade by IG Group being completed over a month ago.
- The delays in the payout process are causing concern for some investors, such as John Haagensen and Matthew, who believe each day of delay costs them interest and leaves them dissatisfied.
- Honest investors who made a loss on their stakes in Freetrade are experiencing a sense of betrayal, with some feeling they've had the raw end of the deal.
- Freetrade investors are questioning the fairness of the acquisition deal, particularly in comparison to institutional investors, and are calling for transparency and potential reforms within the crowdfunding sector.
