Cobra Trading, Inc.

Cobra Trading, Inc. was fined $200,000 for findings that it paid influencers for promotional communications on social media platforms, including online interactive forums and video sharing platforms, but certain influencer communications were not fair and balanced or made claims that were promissory.

The findings stated that the firm paid these influencers a flat fee if a new account was opened and funded by a customer using a unique link it provided and did not limit the compensation influencers could earn. The firm provided influencers with “selling points” that influencers could use in their social media communications, and the firm highlighted specific services and features it offered that the influencers could promote. The majority of the influencers’ posts promoting the firm failed to disclose that they were advertisements.

The findings also stated that the firm failed to approve influencers’ videos before they were used and failed to preserve records of such videos.

The firm did not have an appropriately qualified registered principal review influencers’ videos prior to their publication and did not maintain records of influencers’ videos or the dates they were used.

The findings also included that the firm failed to establish and maintain a supervisory system, and failed to establish, maintain, and enforce WSPs, reasonably designed to supervise its influencers’ retail communications. With respect to videos created by influencers that promoted the firm, the firm’s WSPs did not require, and the firm did not have a system for principal review and approval prior to use.

The firm’s WSPs also did not require supervision of influencers’ posts made in online interactive electronic forums in the same manner as the firm reviewed and supervised correspondence. Subsequently, the firm revised its supervisory system, including its WSPs, to require a registered principal of the firm to review and approve influencer posts prior to use.