Expect Focus Life, Annuity, and Retirement Solutions, December 2021

FINRA Atwitter Over Social Media Influencers

Life, Annuity, and Retirement Solutions   |   Financial Services Regulatory   |   Life, Annuity, and Retirement Solutions   |   Digital and E-Commerce Engagement and Innovation   |   January 11, 2022

Social media influencers are individuals, sometimes celebrities, who help businesses gain customers through social media communications. Influencers may communicate, for example, on TikTok, Facebook, Instagram, YouTube, Twitter, Stocktwits, Reddit, Twitch, and many other platforms, about a business or a product to influence the purchase decisions of potential customers.

In the heavily regulated securities industry, using influencers to acquire customers may raise regulatory issues, including receipt of referral fees and privacy.

On September 16, 2021, FINRA issued a targeted examination letter to member firms asking whether firms use influencers to acquire customers, and if they do, how firms compensate influencers and what firms do with customer data.

FINRA’s letter requested documents, including, among others:

  • Engagement letters, contracts, and agreements in which the firm contracted with influencers to provide social media communications for compensation.
  • Copies of all social media communications influencers posted about the firm, and whether the social media communications were filed with FINRA’s Advertising Regulation Department.
  • Written supervisory procedures, compliance policies, and training materials regarding the use of social media influencers.
  • A list of all unaffiliated third parties with whom the firm shared nonpublic personal information about a customer’s usage of the firm’s website or mobile application.

As to referral fees, FINRA asked whether the firm or an affiliate offered a referral program through which individuals received bonuses, rewards, incentives, or other compensation for referring new customers to open accounts at the firm. FINRA requested information on compensation, benefits, or bonuses offered through referral programs, including how such amounts are determined, presumably to evaluate whether influencers receive transaction-based securities compensation.

As to consumer privacy, FINRA requested information on firms’ compliance with SEC Regulation S-P concerning the collection of data generated by a website or mobile application about a user and then saved (known as cookies). Specifically, FINRA sought information on cookies obtained from customers, or individuals who provided nonpublic personal information but were not onboarded as customers, the firm’s privacy policies and opt-out notices, and related compliance procedures.

Time will tell whether FINRA’s targeted examination findings will lead to enforcement action and/or guidance concerning influencers in the securities industry.


©2024 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.

Subscribe to Publications


The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.