FINRA Slaps BD With $250K Finfluencer Fine

What You Need to Know

TradeZero America paid individuals with social media followings to promote the firm.
The firm did not review its influencers’ videos prior to their posting, nor did the firm retain those videos.
Influencers made exaggerated claims on the firm’s behalf, FINRA said.

The Financial Industry Regulatory Authority has censured TradeZero America Inc. and ordered it to pay a $250,000 fine for failing to oversee social media influencers.

According to FINRA’s order, between July 2020 and October 2022, TradeZero America paid individuals with followings on social media sites to promote the firm.

“Such influencers posted social media communications on the firm’s behalf that were not fair and balanced or that made exaggerated or promissory claims,” the order states.

TradeZero, based in Brooklyn, New York, provides self-directed trading to retail investors through its online portal. The firm has 28 registered representatives at one branch office.

During the same period, TradeZero America “did not review its influencers’ videos prior to their posting on social media platforms, nor did the firm retain those videos,” the order states.

One influencer’s social media platforms had millions of viewers, the order states, and during the relevant period, customers opened approximately 575 accounts using a unique referral link that TradeZero provided to its influencers.

The firm also did not review or retain influencers’ posts made in online interactive electronic forums, and failed to establish, maintain and enforce a system, including written supervisory procedures, reasonably designed to supervise retail communications disseminated on the firm’s behalf by its influencers, according to FINRA.

“TradeZero America’s influencers’ social media posts were retail communications of the firm and therefore subject to FINRA Rule 2210,” FINRA said.