1. Do not post any comment or commentary or distribute any information about an actual ongoing offering of securities by the customer, such as prospectuses, offering memoranda, term sheets, PowerPoints describing the offerings or investor presentations distributed or posted in connection with an offering.
- The sole exception to this prohibition: Influencers may distribute company-prepared press releases or “tombstone” advertisements provided through the Xemoto platform that announce an offering has been completed and the terms of the offering, with no additional commentary.
- Merger announcements also must be distributed without commentary. Any commentary could cause the customer to need to make a filing of the post with its securities regulator(s).
2. If a Finfluencer is a registered securities intermediary, like a broker-dealer or a registered representative, it must comply with the requirements of its regulators and its employer.
3. A Finfluencer who is not registered with a securities regulator cannot engage in any activity that would require it to be registered, e.g., recommend or solicit someone to buy securities of the sponsoring company (no matter the intended audience of such a post, e.g., only distributed to certain investors).
4. You must not:
- Make any post styled as investment advice or guidance or as an investment recommendation.
- Provide any post or link to content styled as a “research report” recommending a security be bought or sold and suggesting a price for purchase or sale unless you are registered as a “research analyst” with the appropriate securities regulator (s).
- Ask followers to click through to indicate if they are interested in investing in the sponsoring company.
5. A rule of thumb: Using language in isolation or together with other posted language or information that constitutes a “call to action” to action to buy or sell a company’s securities is a “recommendation.”
6. You can express your own individual view or opinion such as:
- You “like” the company.
- “I think you will like this company, I do.”
- This is a “good” or “interesting” company.
- The company is in or has a “great business” or “merits further investigation.”
- You can also say things like “you should ‘check out’ the company.”
7. You should avoid any suggestion of what others are doing or saying, e.g., “My friends are buying this stock”, or “I have heard this is a great investment.”
8. Do not repeat or re-circulate rumors, e.g., “There are rumors the company is a takeover candidate.” or, “Everybody says this company is seriously undervalued.”
9. Avoid any suggestion or implication you are providing information not generally available to the public or the investing community: e.g.:
- “The information I am providing you is not available to everyone.”
- “Here’s a hot tip.” or
- “Attached is information not yet available to the public.”
10. Avoid any statements suggesting any investment actions you plan to take or have taken personally: “I own this stock,” or “This is a company I am buying.”
11. Do not link a post to or discuss chats or blogs about investing in the company, or investor message forums like Reddit threads.
12. Encourage people to conduct their own research.
13. Strongly encourage people to consult a registered investment professional before making any investment.
14. Do not post or link to content or commentary that discriminates against or harasses anyone in any manner based on race, sex, national origin, gender or sexual preference, or is sexually explicit, violent, profane, or defamatory.
15. You shall be solely responsible for ensuring that you comply at all times with (i) any and all applicable laws, orders, regulations, legal requirements (including the applicable codes, regulations, licence conditions and standards of all Competent Authorities), and codes of any jurisdiction that are applicable to you or your activities, as amended and in force from time to time, and the rules, regulations, orders, licences or permits issued thereunder, and (ii) any and all guidelines, directives, policies, procedures, rules, regulations, orders, codes, licences, standards, permits, requests and/or requirements of any Competent Authority that are applicable to you or your activities, as amended and in force from time to time. For the purposes of this paragraph 15, “Competent Authority” means any court of competent jurisdiction, or any other authority or governmental or quasi-governmental body, including a regulator or tribunal.
FTC Disclosure Requirements
1. The FTC requires that influencers disclose if they have a “material connection” to the subject of their post. A simple example of such a connection is being paid cash to post. Examples of other covered “material connections” include familial, employment or consulting relationships or receipt of non-monetary things of value of more than minimal value.
2. The FTC requires the disclosure be made each time a communication is made.
3. The disclosure must be placed so it is “hard to miss” and cannot, for example, be mixed in with a bunch of hashtags.
4. The FTC has posted detailed guidance on its requirements for influencers and for social media adverting and marketing generally that can be found on its website at: ftc.gov/system/files/documents/plain-language/1001a-influencer-guide and www.ftc.gov/news-events/blogs/business-blog/2019/11/disclosures-101-new-ftc-resources-social-media-influencers
You should familiarize yourself with these FTC resources.
Platform Requirements for FTC Required Posts
1. Most social media platforms and channels post rules and guidelines on acceptable forms of disclosures to comply with FTC mandates, acceptable content, disclosure placement and other requirements.
2. Finfluencers must familiarize themselves with each platform’s requirements and must comply with all platform requirements.
3. As an illustration: at the time of this writing Twitter:
- Requires FTC payment disclosures be made in full within the first 125 characters of the caption.
- Allows disclosures posted in the form: # SPONSORED or # PAID, which can be followed by the name of the brand, [here the issuer company], right after the tag and title.
- Has disclosure requirements for video, which can be made visually or in audio, with requirements for each.
United States Securities Act Disclosure Requirement
1. Section 17(b) of the Securities Act makes it unlawful to:
publish, give publicity to, or circulate any notice, circular, advertisement, newspaper, article, letter, investment service, or communication which, though not purporting to offer asecurityfor sale, describes suchsecurityfor a consideration received or to be received, directly or indirectly, from anissuer,underwriter, ordealer,without fully disclosing the receipt, whether past or prospective, of such consideration and the amount thereof.
2.The United States Securities and Exchange Commission (“SEC”) interprets the Securities Act to require disclosure that a payment was or is being made by a company or someone on its behalf, the amount paid and the form of payment (cash, securities).
3. General disclosure such as “[influencer] may have received payment for this communication” is not sufficient.
4. Disclosures must be clear and concise and sufficiently designed, written and prominent enough to readily accessible.
5. An example of a fully compliant disclosure of cash payments follows:
As required by section 17(b) of the United States Securities Act of 1933, please be informed that [INFLUENCER] is paid by or on behalf of [ISSUER] $xxx monthly, by Xemoto beginning in Xx yy, 2021, for aa months of posts of its press releases and news stories about it.
7. For some platforms like Twitter disclosure cannot be made fully in the body of the message itself due to character or other limits. In that situation, a hashtag can be used linking to the full disclosure, which should be on the influencer’s first landing page. An example: #Paid Content