Moomoo Financial & M1 Finance Face FINRA Sanctions for Influencer Misconduct

Moomoo Financial Inc., formerly operating as Futu Inc., has agreed to pay a $750,000 fine following an investigation by the Financial Industry Regulatory Authority (FINRA). The settlement, reached in November 2024, addresses violations related to social media promotions, supervisory oversights, and customer privacy practices. While Moomoo consented to the settlement, it neither admitted nor denied the allegations and confirmed that steps have been taken to strengthen its supervisory and privacy protocols.

The investigation into Moomoo Financial‘s operations uncovered several compliance breaches between January 2020 and 2022. FINRA found that Moomoo had engaged nearly 400 social media influencers to promote its services, some of whose content contained misleading claims. These posts overstated potential returns, downplayed risks associated with options trading, and implied unwarranted guarantees against investment losses, misrepresenting the firm’s regulatory protections.

The firms supervisory systems also came under scrutiny. FINRA noted a failure to ensure that a registered principal reviewed and approved the social media content before publication. Moreover, records related to influencer communications, including dates of use and approval details, were inadequately maintained.

Further violations were identified in Moomoos privacy practices. From January 2018 to December 2021, the firm did not provide privacy policy notices to more than 450,000 customers during account openings or annually, as required by FINRA regulations.

As part of the settlement, Moomoo Financial is required to submit a certification from senior management within 180 days, confirming that corrective actions have been implemented. The firm must also provide evidence of compliance with FINRA‘s supervisory and record-keeping requirements.’

The enforcement action against Moomoo follows a broader trend of regulatory scrutiny over the use of social media in financial services. In a separate case, FINRA imposed an $850,000 fine on M1 Finance LLC for violations linked to its social media influencer programme. The investigation revealed that between January 2020 and April 2023, M1 Finance compensated approximately 1,700 influencers to create promotional content, which led to the opening of over 39,400 new accounts.

FINRA found that these influencer posts were often unbalanced or misleading, with some making exaggerated claims about the firms margin lending programme. M1 Finance failed to implement an adequate supervisory system to ensure compliance with FINRA Rules 2210 and 2010, which govern public communications and uphold principles of commercial honour. In response, the firm agreed to implement a robust supervisory framework without admitting or denying the charges.

These enforcement actions reflect FINRAs increasing vigilance in regulating social media use within the financial services sector. The regulatory body recently launched its “Get Your Head in the Trade” campaign, aimed at educating new investors about the importance of understanding investment risks and personal financial goals. The campaign also highlights the dangers of relying on financial influencers, a trend that has led many inexperienced investors to engage in riskier investment behaviours.

Data from FINRAs Investor Education Foundation revealed that new and younger investors, especially those using social media for financial advice, are more likely to trade in high-risk assets such as cryptocurrencies, options, and penny stocks. The findings underscore the importance of regulatory oversight as firms continue to leverage social media to engage with retail investors.