Angels fear consequences of FMA wholesale investor test case

Angel investors are concerned their ability to invest in startups could be in jeopardy if the Financial Markets Authority gains support for its stance on wholesale investors’ eligibility.

The FMA has asked the High Court for help clarifying the law around eligible investor certificates, with the regulator and industry in disagreement about how to interpret the exclusion rules for investors with enough experience to forgo the usual protections retail investors receive.

If the FMA proves its position, it could result in wholesale investors needing to provide more detailed evidence of their relevant investment experience and place higher expectations of due diligence on those offering the investment opportunity.

Angel Association New Zealand chief executive Bridget Unsworth wants to meet with the FMA to better understand what it hopes to achieve.