Firm Fined for Violations Regarding Use of Social Media Influencer Program
May 31, 2024
The Case
FINRA announced that it fined a firm $850,000 for social media posts made by influencers on the firm’s behalf that were not fair or balanced or contained exaggerated, unwarranted, promissory, or misleading claims.
The censure also highlighted that the firm failed to have a reasonable system, including written procedures, for supervising the communications that the firm’s influencers made on its behalf, in violating both FINRA and SEC rules.
Why Does This Matter?
This case arises from FINRA’s examination of firm practices regarding customer acquisition via social media channels. It represents the first formal FINRA disciplinary action involving a firm’s supervision of social media influencers.
InnReg's Experience
InnReg has over a decade of experience developing effective supervisory frameworks for fintechs based on a systematic approach to identifying risks, implementing effective controls, and enhancing internal documentation to reduce regulatory burdens. InnReg’s compliance consulting services empower fintechs to enhance policies, processes, and technologies for e-communications compliance.
Learn More About This Topic
For additional details, read InnReg’s leading-edge perspective on financial advertising compliance, which provides financial innovators with a summary of the latest FTC and SEC regulations, as well as key insights on the impact of compliance programs on digital marketing.
The US Securities and Exchange Commission (SEC) has charged a trading platform operating in the over-the-counter (OTC) securities market for failing to comply with the Bank Secrecy Act (BSA) by not filing required Suspicious Activity Reports (SARs).
In 2024, we’ve witnessed a series of enforcement actions targeting cryptocurrency-focused fintech companies that provide legitimate services but fail to obtain proper licensing or registration.
The US Securities and Exchange Commission (SEC) has initiated a sweep examination targeting registered investment advisors (RIAs) to assess their compliance with the new T+1 settlement cycle rules.
