Regulator Cracks Down on Unlicensed Investment Advice on Social Media
The Securities and Exchange Commission (SEC) has issued warnings to companies and individuals offering unlicensed investment advice on social media channels, warning them to curb market manipulation. According to Tushara Jayaratne, Deputy Director General of the SEC, no one can give investment advice unless they are a registered investment advisor (RIA), and promoting buy or sell recommendations without proper registration is also prohibited. The SEC has observed unregistered individuals and companies disseminating investment advice on YouTube, WhatsApp, and X accounts and is tracking them closely.
Key Takeaways:
- The SEC has warned companies and individuals for "reckless conduct" in sharing investment advice on social media platforms.
- A 18-year-old was banned from the industry for five years in 2023 for continuing to give investment advice on Twitter despite not being a registered investment advisor.
- The SEC has intensified its scrutiny of financial influencers on platforms such as Facebook and Twitter.
- The regulator has established a dedicated website page to confidentially report suspected market-related misconduct on social media.
- Providing investment advice without being a registered investment advisor (RIA) is a requirement, according to the SEC.
- Social media channels, WhatsApp groups, and X accounts are being monitored by the SEC for unregistered investment advice.
Statistics:
- The SEC banned an 18-year-old from the industry for five years in 2023 for providing unlicensed investment advice on Twitter.
- The SEC has intensified its scrutiny of financial influencers on platforms such as Facebook and Twitter.
- The regulator established a dedicated website page in February 2024 to report suspected market-related misconduct on social media.
- The SEC has observed unregistered individuals and companies disseminating investment advice on social media platforms.
Sources:
- Sunday Times Business
- The SEC's dedicated website page