The BC Securities Commission (BCSC) has joined forces with regulators across the globe to crack down on unauthorized “finfluencers” who are putting millions of social media users at risk by touting financial products or services illegally.
During the Global Week of Action Against Unlawful Finfluencers from June 2 to 6, participating regulators used a combination of enforcement actions (including arrests), educational outreach with finfluencers on how securities regulations may apply to them and consumer awareness programs to prevent people from investing based on misleading content.
Finfluencers use social media platforms to share financial advice or investment tips. They often don’t possess formal financial education or credentials, and their advice – often accompanied by the trappings of a lavish lifestyle – may not always align with regulatory standards or individual investor needs.
Some finfluencers may tout products or services without regulatory authorization, or without making proper disclosure that they are being compensated by the companies they mention.
As international relationships are vital to countering this problem, regulators and law enforcement agencies globally have been working closely to disrupt unauthorized finfluencer activity. During the Global Week of Action, the BCSC joined other Canadian regulators, as well as securities regulators in the United Kingdom, Australia, the United Arab Emirates, Hong Kong and Italy, in targeting finfluencers.
The BCSC took several steps:
- Issuing 74 letters to YouTubers and others from around the world who have promoted B.C public companies, explaining how to comply with rules for sharing information that could encourage the buying, selling, or holding of the company’s shares or other securities
- Hand-delivering a caution letter to a Vancouver-area finfluencer about potentially unregistered activity, and directing him to get legal advice before promoting securities-related services
- Meeting with businesses that have promoted B.C. public companies, including one from B.C., one based elsewhere in Canada, and one based in Europe
In addition, the BCSC also conducted outreach to investors and finfluencers during the week, including publishing educational information and hosting a June 5 webinar for prominent Canadian finfluencers to help them better understand securities regulations.
Last year, the BCSC issued a notice about how promotional disclosure must be presented to comply with the law and provided guidance for promotional communications about companies, including a checklist of what to consider before communicating to investors or potential investors..
Under B.C.’s Securities Act, any promotional content related to securities must clearly and conspicuously disclose if it’s disseminated by or on behalf of a company or someone who owns shares in that company. Failure to comply can lead to significant penalties.
In 2023, a BCSC panel found that a B.C. marketing company and its CEO repeatedly violated the Act by not adequately disclosing that it distribute advertorials and social media posts on behalf of five companies involved in mining, technology and cannabidiol (CBD) products. The panel ordered the company’s CEO to pay a $50,000 penalty and the company to pay a $25,000 penalty.
The BCSC would like to thank the Financial Conduct Authority for initiating the Global Week of Action Against Unlawful Finfluencers.
