European securities regulators are calling on some of the world’s largest tech companies and social media platforms to take action to prevent investment scams.
In a series of letters to social media giants (TikTok, Meta and X), tech platforms (Alphabet, Amazon, Apple, Google and Reddit), along with messaging platforms (Snap and Telegram), the European Securities and Markets Authority (ESMA) asked the companies to take steps to prevent unauthorized financial services from being promoted on their services.
“The increasing spread of online scams targeting retail investors poses a serious risk to investors themselves and to society, with fraudulent actors exploiting digital platforms to advertise unlawful financial services,” the regulator said.
Unregulated firms and activities are causing investor losses and undermining trust in both the financial sector and the online world, it added.
ESMA’s campaign comes in the wake of an effort launched last week by the International Organization of Securities Commissions (IOSCO) that also singled out tech sector firms for their role in facilitating online financial misconduct.
In its letters to the tech giants, ESMA said that while it believes “a coordinated, international approach is essential to safeguarding investors and maintaining trust in digital platforms,” it’s also taking action on behalf of European investors to address the region’s specific investor protection requirements.
“Certain platforms have already implemented measures to restrict financial advertisements to authorized entities in specific jurisdictions,” it noted. It also urged the tech firms to take action on behalf of European investors by checking the registration status of firms seeking to promote financial products and services on their platforms before allowing this kind of activity.