EU Investor Protection: Important Warnings for Finfluencers on Social Media

In a recent publication, the European Securities and Markets Authority (ESMA), along with supervisors of EU Member States, has cautioned the public regarding the requirements under the Market Abuse Rules when posting investment recommendations on social media. Specifically, finfluencers should take heed of these rules.

An investment recommendation can be any type of public communication, like a post, a video, including social media, in which a person gives advice or ideas about buying or selling a financial instrument or how to compose a portfolio of financial instruments. This can be done, directly or indirectly.

Some of the key rules include:

• Identification: like name, job title of all the persons involved and date and time of the recommendation.

• Investment recommendation must be objectively represented, like facts are clearly distinguished from interpretations, estimates and opinions.

• Any conflicts of interests must be clearly disclosed, so to leave no doubt of the personal interest/benefits involved in giving the recommendation.

To learn more about the general set of requirements, see this message posted by ESMA.

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