M1 Finance has been fined $850,000 by the Financial Industry Regulatory Authority (FINRA) due to social media posts made by influencers on behalf of the fintech company.
From early 2020 over a three-year period, M1 launched an extensive social media campaign that involved approximately 1,700 influencers. These influencers were instructed to post content featuring a unique hyperlink directing potential new customers to the M1 Finance site for opening and funding a brokerage account.
Influencers were compensated with a fixed fee for each account opened and funded through their unique links, resulting in a total of 39,400 new accounts during the campaign.
However, FINRA identified that some influencers’ posts were not “fair and balanced” and included exaggerated, unwarranted, promissory, or misleading claims. M1 Finance failed to review or approve the influencers’ content prior to its publication and did not retain those communications, violating FINRA rules.
As part of the settlement, M1 is paying $850,000, marking the first enforcement action related to social media influencers by FINRA. The company has neither admitted nor denied the charges.
Bill St. Louis, EVP and head of enforcement at FINRA, remarked, “As investors increasingly use social media to inform their financial decisions, FINRA’s rules on communicating with the public are especially critical.”