Moomoo Financial Inc.
The findings stated that the firm paid influencers to promote the firm on social media platforms, including videos and in online interactive electronic forums. The firm paid these influencers either for each new account opened with a unique link the firm provided or for each post the influencer created promoting the firm. The firm did not limit the compensation influencers could earn.
Customers opened and funded more than 29,000 new accounts using the unique referral links that the firm provided to its influencers. The firm’s influencers posted communications that claimed that the firm charged zero commission but did not disclose that other fees may apply or provide a prominent link to the firm’s fee schedule.
The influencers also posted communications that contained false and misleading claims suggesting that because the firm was a FINRA member, customers’ investments were safe. In addition, the influencers failed to clearly identify the communications as paid advertisements.
The findings also stated that the firm failed to review and approve all its influencers’ posts about the firm and failed to preserve records of its influencers’ posts. Furthermore, the firm did not maintain a copy of influencers’ posts promoting the firm or records of the dates of use.
Furthermore, when the firm did review influencers’ communications, it did not maintain records of that review, including the names of the individuals who reviewed and approved the posts and the dates of approval.
The findings also included that the firm failed to establish, maintain, and enforce a reasonably designed supervisory system, including WSPs, for its influencers’ retail communications. The firm did not establish and maintain a supervisory system reasonably designed to preserve records related to the firm’s influencers’ communications, including copies of the communications, dates of use, or the name of any registered principal who approved the communication and the date of approval. Subsequently, the firm implemented a system to preserve records of its review and approval of influencers’ communications promoting the firm.
FINRA found that the firm failed to provide initial and annual privacy notices to firm customers, as required by the SEC’s Regulation S-P. The firm did not provide a copy of the firm’s privacy policy to customers at account opening. In addition, the firm also did not provide annual privacy notices to customers. Ultimately, the firm updated its process and now delivers an annual privacy notice to its customers.
