FINRA's Landmark Action On Social Media Influencer Programs

In a significant development, FINRA has imposed an $850,000 fine on a financial services firm for violations related to its use of social media influencers. This marks the first enforcement action by FINRA concerning a firm's supervision of social media influencer activities.

The case centers around social media posts made by influencers on behalf of the firm, which were found to be neither fair nor balanced. These posts contained exaggerated or misleading claims, including statements about the firm's margin lending program that misrepresented the terms and risks associated with margin accounts. FINRA found that the firm failed to review or approve these posts before they were published and lacked adequate supervisory systems to ensure compliance with FINRA's rules on public communications.