FINRA Reviews the Use of Social Media Influencers



The Financial Industry Regulatory Authority (FINRA) examines how brokerage firms utilize social media platforms and influencers to acquire new business.


The focus is on any website or application that allows users to generate and share content or network socially, including Reddit, Twitch, Stocktwits, TikTok, YouTube, Twitter, Facebook, and Instagram.


Definition of a Social Media Influencer


In general, a social media influencer is anyone with a reputation of being knowledgeable or having expertise on a particular topic. They post regularly on that topic on social media platforms and gain a loyal, enthusiastic fan base.


Firms, companies, and brands then offer the influencer partnership to encourage their followers to interact with or purchase the product or service they are promoting.


According to the letter, the definition of a social media influencer is any third party who has a contract with the firm or gets compensated to offer social media communications.


If a firm uses an influencer, they become an extension of the firm and its marketing program. They must ensure that their communication is accurate and doesn't misrepresent the firm or mislead the audience.


The essence of contracting social media influencers is to gain access to their loyal fan base. Any information from the influencer should align with the information on the firm’s website.


The Exam Letter at a Glance

FINRA stated that the review of firm practices is specific to customer acquisition through social media in a new exam letter. It also looks at how firms handle compliance obligations to the information they collect from these customers and any data provided by other individuals to the firms.


The FINRA examination encompasses all social media communications starting from 1st January 2020 to a specified date that varies for every firm. The sweep targets several firms, but FINRA didn’t specify the exact number.


In hindsight, FINRA’s President, CEO Robert Cook, issued an early warning that the sweep exams would target social media.


The exam sweep follows the move by Massachusetts Commonwealth Secretary William Galvin to fine MassMutual a sum of $4.75 million for not supervising social media usage by some agents. A social media influencer contracted by the firm, Keith Gill, also known as “Roaring Kitty," managed to inflate the value of GameStop stock at the beginning of the year for his benefit.



Regulators seek to know the lengths that social media influencers in the finance field (finfluencers), brokers, and advisors go to acquire customers.


Firms should provide:

  • The descriptions of methods that the firm uses to find and hire people or entities that offer social media services. It also includes how these individuals and entities get compensated for social media communications

  • Any written documentation such as contracts, agreements, and engagement letters between the firm, affiliates, and contracted individuals or entities who offer social media services

  • Descriptions and the identity of entities or individuals that hold non-written agreements for compensation for providing social media communications

  • Proof of whether every social media communication had approval from a firm's registered principal and a statement regarding the firm's supervision policy on the same. FINRA is keen to know how the firms monitor influencers and referral programs and any compliance policies, training materials, and writing guidelines

  • Written supervisory procedures specific to compliance with the SEC’s Regulation S-P, particularly collection of cookies or saved website data on the user

  • A description of the compensation and any bonuses paid to finfluencers and referral fee payments where applicable. The firms should also provide any background information they use when selecting third parties

  • Copies of any emails and ads that the firms and their affiliates use during finfluencers recruitments

Specific client information that the firm shares with vendors and what limitations they implement to protect the usage of client data and the privacy of these individuals

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