Hiring Social Media Influencers? How You Influence Matters

FINRA, as part of its targeted exam of member firms’ social media practices for gaining new customers, recently announced an $850,000 fine against M1 Finance LLC (“M1 Finance”) stemming from promotional social media posts made by influencers the firm hired to expand its customer base. Unfortunately for M1 Finance, FINRA determined that prior to hiring these influencers, it failed to implement effective supervisory procedures that complied with FINRA Rules and securities law to oversee the communications its influencers were posting online. Therefore, FINRA found this resulted in social media posts that violated multiple FINRA Rules for communicating fair and balanced investment information to retail customers. Firms should consider the lessons to be learned from M1 Finance’s experience.