The Financial Industry Regulatory Authority (FINRA) is a self-regulatory organization authorized under U.S. federal securities laws and registered with the Securities and Exchange Commission (SEC). It plays a crucial role in overseeing U.S. member broker-dealers and their personnel.
The Securities and Exchange Commission (SEC) is a government organization with a broad mandate to oversee and regulate the securities industry in the United States.
In summary, while both the SEC and FINRA regulate the financial industry, the SEC is a government entity focused on investor protection, and FINRA is a self-regulatory organization that works alongside the SEC to enforce rules and maintain market integrity.
M1 Finance LLC was fined $850,000 by FINRA due to issues related to their use of social media influencers. The influencers made posts that were not fair or balanced and contained misleading claims, violating FINRA's communication rules.
M1 Finance's influencer program was notably extensive, with over 39,400 new accounts opened through a program where influencers were paid to promote the company using unique tracking hyperlinks. This significant volume of new accounts highlights the program's impact and reach.
The firm violated several FINRA rules by failing to review, approve, or retain influencer communications. Additionally, M1 Finance lacked a supervisory system to oversee these activities properly. This failure to implement adequate supervision and compliance measures was a key factor in the enforcement action taken by FINRA.
In response to FINRA's findings, M1 Finance consented to the violations and agreed to implement a supervisory system designed to comply with communication rules. This move aims to ensure future compliance and prevent similar issues from occurring.
For more detailed information, you can visit FINRA's website and their Disciplinary Actions Online database. Further details about the case are available in the announcement titled "FINRA Fines M1 Finance $850,000 for Violations Regarding Use of Social Media Influencer Program" on FINRA's website.
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