Firm Settles Charges for Influencer Marketing Violations

A firm that provides direct on-line trading to retail investors settled FINRA charges for failing to oversee the marketing of its social media influencers.

According to the AWC, the firm engaged social media influencers to promote the firm on the influencers' social media platforms. FINRA found that the influencers' posts did not disclose the risk of investing, were not fair and balanced and contained promissory and exaggerated statements. Additionally, FINRA said that the firm did not have a qualified registered principal approve the influencer posts prior to publication online. FINRA found that the firm did not preserve these posts.

As a result, FINRA found that the Firm violated FINRA Rules 3110 ("Supervision"), 2010 ("Standards of Commercial Honor and Principles of Trade"), 2110 ("Recommendations"), 4511 ("General Requirements"), Regulation S-P Rule 4 and Exchange Act Section 17(a) ("Records and Reports").

To settle the charges, the firm agreed to (i) a censure and (ii) pay a $250,000 fine.