Rendimento Etico Suspended by Consob for Irregularities and Conflicts of Interest

The real estate crowdfunding platform Rendimento Etico has been suspended for 120 days by Consob following an inspection concluded in November 2024.

The decision is based on clear procedural shortcomings and failure to comply with European crowdfunding regulations, with particular reference to Regulation (EU) 2020/1503.

The main critical issues of Rendimento Etico

Among the main critical issues found by Consob inspectors are violations related to conflicts of interest, irregularities in project selection, lack of information for investors and problems in the management of complaints.

Systemic Conflicts of Interest: The company allegedly violated its internal regulations by publishing offers linked to individuals with personal and professional ties to the President and CEO of Rendimento Etico itself, in clear contrast with current regulations. The Board of Directors (BoD) not only approved such projects, but ignored the Technical Committee’s recommendations regarding transparency on any conflicts.

Dominance of a single affiliate: Over 70% of the published projects were managed by Case Italia Srl, the sole parent company of Rendimento Etico. The lack of separation of activities and the conflict of interest with the parent company were not adequately managed, raising doubts about the impartiality of the project evaluation.

Shortcomings in project selection: Project documentation was judged to be incomplete and insufficient. Essential elements, such as bills of quantities and time schedules, were missing, while projects with serious critical issues still obtained favourable evaluations.

Investor Classification: The process of classifying investors into “sophisticated” and “non-sophisticated” does not comply with European guidelines. Investors were not provided with sufficient information on the risks and, in some cases, the platform allowed investments above the established limits, bypassing the required blocks.

Complaints Management and Lack of Transparency: The complaints register was only established in July 2024, months after the inspection began. Numerous complaints were ignored or not formally recorded, depriving investors of adequate feedback.
Information criticalities and project monitoring

According to Consob inspectors, the Rendimento Etico platform has proven to be deficient in providing investors with complete and accurate information. In several cases, crucial data, such as the progress of work on financed construction sites, has not been updated.

Consob found that, even in cases of default, communication to investors was late or completely absent.

Furthermore, monitoring of funded projects was found to be non-existent or ineffective. As of June 2024, 75 projects had expired and been extended, for a value of 35.5 million euros, without providing evidence of inspections or checks on construction sites.

Consob Provisions

Consob has asked Rendimento Etico to implement internal corrective measures to ensure:

The correct management of conflicts of interest and complaints.
Adopting a more rigorous and transparent project selection process.
Compliance of investor classification procedures with EU regulations.
Publishing complete and reliable information about projects and the platform.
During the suspension period, Rendimento Etico will be able to complete only the offers already published before the measure, respecting the contractual obligations with investors and project owners.

Conclusion

The case of Rendimento Etico represents an example of lack of supervision and transparency in a sector, that of real estate crowdfunding, which requires rigorous standards to protect investors.

The suspension by Consob is a strong signal to ensure compliance with the rules and safeguard the integrity of the market.

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(Featured image by Sora Shimazaki via Pexels)

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