Not upheld: unfair treatment - failure to revalue shares or suspend trading following material announcement complaint against Seedrs Limited trading as Republic Europe

Decision detail

Summary

Mr M, an experienced private equity investor, held shares in an unlisted company through Seedrs' Secondary Market platform. In August 2024, the company announced a secondary share sale to employees at $865 per share, significantly higher than the previous $33 billion valuation. Seedrs declined to revalue the shares on its platform or suspend trading, maintaining its policy that secondary sales do not trigger revaluation. Mr M subsequently sold his shares at around £400 per share over the following months. When the secondary opportunity was extended to all shareholders in November and prices rose to £675, Mr M complained that Seedrs should have either revalued the shares or suspended trading. The ombudsman found that Seedrs acted fairly because the August announcement was publicly available information, Mr M had equivalent market knowledge to Seedrs, and as an experienced investor he made voluntary trading decisions without unfair encouragement from Seedrs.

The Ombudsman's reasoning

The ombudsman found that while Seedrs' decision not to revalue shares in hindsight seems difficult to understand, Seedrs provided a reasoned explanation on 3 September 2024. Mr M, an experienced investor, continued to sell shares after receiving this explanation, indicating he was content with it. The ombudsman interpreted the Secondary Market eligibility criteria as aimed at situations where Seedrs is aware of non-public information, not publicly announced information available to all market participants. The August announcement was public knowledge, so the first eligibility criterion (awareness of events that may change valuation) was not triggered. Regarding the third criterion (detriment to buyers or sellers), the ombudsman found this refers to situations where Seedrs has non-public information causing potential harm, not suboptimal investment timing. Even if Seedrs erred in allowing trading to continue, the ombudsman found it would be unfair to transfer investment risk to Seedrs when Mr M had the same market knowledge and made voluntary trades as an experienced investor without unfair encouragement.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website