Canada’s big four securities regulators — Alberta, British Columbia, Ontario and Quebec — have joined with five other regulators from around the world in a joint exercise against “finfluencer” misconduct.
Regulators from Canada, the U.K., Australia, Hong Kong, Italy and the United Arab Emirates took a variety of actions against finfluencers, including issuing warnings, cease and desist letters and taking legal action.
The U.K.’s Financial Conduct Authority (FCA) said that its effort resulted in several arrests, and the launch of criminal proceedings against three finfluencers. Additionally, the warnings it issued will result in over 650 requests to social media platforms to take down content from unauthorized finfluencers, the FCA said.
“Our message to finfluencers is loud and clear. They must act responsibly and only promote financial products where they are authorized to do so — or face the consequences,” said Steve Smart, joint executive director of enforcement and market oversight at the FCA, in a release.
The Ontario Securities Commission (OSC) reported that it reviewed the activities of 87 finfluencers and nine issuers that hired finfluencers for stock promotion activity, and found a range of quality and accuracy in the information being shared — including some finfluencers that were providing unregistered investment advice, and some sharing misleading information (particularly in the crypto sector).
“International relationships are vital in countering this growing issue, and we are pleased to have played an important part in disrupting harmful finfluencer activity. The OSC’s recent research highlights the substantial influence social media personalities have on investor behaviour, underscoring the need for proactive intervention to protect investors,” said Bonnie Lysyk, executive vice-president, enforcement at the OSC.
The B.C. Securities Commission reported that it cautioned one Vancouver influencer about potentially-unregulated activity and warned him to get legal advice. It also issued letters to 74 YouTubers and others around the world explaining how to comply with its rules for sharing securities-related information.
The Autorité des marchés financiers (AMF) said that its goals were to, “draw finfluencers’ attention to the potentially illegal aspects of their activities,” while also raising public awareness to the risks associated with finfluencers.
“Most finfluencers are acting within the framework of the law. Some, however, are touting products or services without being registered with the regulators. Others are making false promises of a lavish lifestyle or easy profits,” said Éric Jacob, executive director, enforcement, at the AMF.
“By joining forces with other regulators in Canada and globally, we clearly affirm our commitment to raising public awareness and combatting illegal conduct that puts consumers’ finances at risk,” he added.