SEC Fines RIA for Paying Social Media Influencers to Solicit Clients

Fundrise Case

The SEC order states that “Fundrise clients were not fully informed of the content creators’ financial interests in promoting Fundrise’s investment advisory services and real estate investment platform and therefore lacked the information necessary to evaluate the content creators’ recommendation of Fundrise. ”

Since February 2016, the SEC states, Fundrise has contracted with content creators to promote Fundrise’s online real estate investment platform on their blogs, websites, newsletters and social media channels.

As part of the contractual arrangements, the content creators agreed to include hyperlinks to Fundrise’s platform in their online promotions, the SEC explains.

“ Fundrise paid the content creators based on the number of individuals who clicked on the hyperlinks and entered their email addresses,” the order states. “Some of these individuals ultimately entered into advisory relationships with Fundrise.”

In total, Fundrise paid more than $8 million to over 200 content creators, who referred more than 66,000 new clients to the firm, according to the SEC.

“To date, those clients have accounted for more than $300 million of Fundrise’s AUM, yielding over $655,000 in advisory fees for the firm,” the SEC said.

Further, Fundrise “did not adopt and implement written policies and procedures concerning the use of solicitors that were reasonably designed to prevent violations of the Cash Solicitation Rule.”