The Financial Industry Regulatory Authority (FINRA) has fined M1 Finance $850,000 due to lapses in the financial technology company's supervision of social media influencers. This enforcement action involves the company's influencer marketing campaign for brokerage accounts.
Between January 2020 and April 2023, M1 Finance ran an influencer marketing campaign involving more than 1,700 social media influencers to promote the firm's services. These influencers were tasked with creating content showcasing M1 Finance's brokerage accounts, attracting potential clients with the promise of financial freedom and flexibility.
According to the regulator, investigations revealed numerous violations committed by M1 Finance and its influencers. Posts on social media promoting M1 Finance allegedly did not provide accurate information in accordance with regulations. FINRA explained that the company misled the public with the lure of easy wins because the influencers' posts did not meet regulatory standards.
Bill St. Louis, Executive Vice President and Chief Enforcement Officer at FINRA, said: “As investors increasingly use social media to inform their financial decisions, FINRA's rules in matters of communication with the public are particularly crucial. FINRA will continue to question whether firms are using practices and maintaining monitoring systems reasonably designed to address the risks associated with social media influencer programs.
We fined M1 Finance $850,000 for social media posts made by influencers on behalf of the company that were not fair or balanced, or contained exaggerated, unjustified, promising or misleading claims.
Learn more ▶️ pic.twitter.com/uqD7uruZyV
-FINRA (@FINRA) March 18, 2024
Specifically, claims about the company's margin lending program were found to be misleading, with influencers falsely claiming that customers could repay margin loans at any time without any consequences.
Regulatory Oversight and Compliance
Additionally, the company failed to review or approve its influencers' posts, in violation of regulatory requirements. In addition to this, M1 Finance lacked a reasonable monitoring system and written procedures to monitor influencer communications. Thus, the company accepted the regulator's findings and committed to remedying these deficiencies.
Recently, FINRA fined Morgan Stanley Smith Barney LLC a hefty $1.6 million for failing to promptly close failed inter-dealer municipal securities transactions and take timely action to obtain physical possession or control of municipal security positions that exceeded 30 calendar days. The tycoons reported.
During its investigation, FINRA discovered instances in which Morgan Stanley failed to reverse or close 239 inter-dealer municipal transactions exceeding 20 calendar days after the settlement date, totaling approximately $9 million from December 2016 to August 2021.
The Financial Industry Regulatory Authority (FINRA) has fined M1 Finance $850,000 due to lapses in the financial technology company's supervision of social media influencers. This enforcement action involves the company's influencer marketing campaign for brokerage accounts.
Between January 2020 and April 2023, M1 Finance ran an influencer marketing campaign involving more than 1,700 social media influencers to promote the firm's services. These influencers were tasked with creating content showcasing M1 Finance's brokerage accounts, attracting potential clients with the promise of financial freedom and flexibility.
According to the regulator, investigations revealed numerous violations committed by M1 Finance and its influencers. Posts on social media promoting M1 Finance allegedly did not provide accurate information in accordance with regulations. FINRA explained that the company misled the public with the lure of easy wins because the influencers' posts did not meet regulatory standards.
Bill St. Louis, Executive Vice President and Chief Enforcement Officer at FINRA, said: “As investors increasingly use social media to inform their financial decisions, FINRA's rules in matters of communication with the public are particularly crucial. FINRA will continue to question whether firms are using practices and maintaining monitoring systems reasonably designed to address the risks associated with social media influencer programs.
We fined M1 Finance $850,000 for social media posts made by influencers on behalf of the company that were not fair or balanced, or contained exaggerated, unjustified, promising or misleading claims.
Learn more ▶️ pic.twitter.com/uqD7uruZyV
-FINRA (@FINRA) March 18, 2024
Specifically, claims about the company's margin lending program were found to be misleading, with influencers falsely claiming that customers could repay margin loans at any time without any consequences.
Regulatory Oversight and Compliance
Additionally, the company failed to review or approve its influencers' posts, in violation of regulatory requirements. In addition to this, M1 Finance lacked a reasonable monitoring system and written procedures to monitor influencer communications. Thus, the company accepted the regulator's findings and committed to remedying these deficiencies.
Recently, FINRA fined Morgan Stanley Smith Barney LLC a hefty $1.6 million for failing to promptly close failed inter-dealer municipal securities transactions and take timely action to obtain physical possession or control of municipal security positions that exceeded 30 calendar days. The tycoons reported.
During its investigation, FINRA discovered instances in which Morgan Stanley failed to reverse or close 239 inter-dealer municipal transactions exceeding 20 calendar days after the settlement date, totaling approximately $9 million from December 2016 to August 2021.