Public Investing, Inc. has been fined $350,000 and censured by the Financial Industry Regulatory Authority (FINRA) over failures related to its use of social media influencers for marketing.
Public Investing Fined $350k By FINRA
According to a letter of acceptance, waiver, and consent, published by FINRA, the New York-based brokerage firm paid more than 100 influencers to promote its services on platforms like Instagram and YouTube between January 2020 and March 2023.
These paid posts, which attracted over 23,000 new accounts, are said to have often included misleading or unbalanced claims and failed to disclose that they were advertisements.
Among the infractions, influencers described the firm’s services as “commission free” without clarifying that other fees might apply or providing access to the firm’s fee schedule.
Additionally, it is alleged that others promoted fractional share trading without disclosing key limitations. FINRA says Public Investing also failed to properly review, approve, or retain records of these communications, violating multiple FINRA rules as well as the Securities Exchange Act.
FINRA found that the firm lacked an adequate supervisory system to oversee communications disseminated by influencers and had not implemented effective written supervisory procedures during the period in question.
In addition to the fine and censure, Public Investing must provide written certification within 60 days that it has remedied the issues and implemented a compliant supervisory framework. The settlement avoids formal disciplinary proceedings, with the firm neither admitting nor denying the findings.
Public Investing accepted and consented to the findings by FINRA without admitting or denying them.
