M1 Finance has been fined $850,000 by the Financial Industry Regulatory Authority (Finra) for social media posts made by influencers on the fintech's behalf.
For three years from early 2020, M1 embarked on a massive social media campaign involving around 1700 influencers, instructing them to post content that included a unique hyperlink to the firm’s site that potential new customers could use to open and fund an M1 Finance brokerage account.
The influencers were paid a flat fee for every account that was opened and funded by the customer using the unique link. In total, the campaign saw 39,400 accounts opened and funded.
However, according to Finra, some influencers made some posts that were not "fair and balanced, or contained exaggerated, unwarranted, promissory or misleading claims". M1 Finance did not review or approve the content in its influencers’ posts prior to use or retain those communications, as required by Finra rules.
M1 is paying $850,000 to settle what is the first social media influencer-related Finra enforcement action. The company has neither admitted or denied the charged.
Bill St Louis, EVP, head of enforcement, Finra. says: "As investors increasingly use social media to inform their financial decisions, FINRA’s rules on communicating with the public are especially critical."