Australian court finds influencer Tyson Scholz advised on ASX trading without a license

Following a complaint by the Australian Securities and Investments Commission (ASIC), the Federal Court has found social media influencer Tyson Robert Scholz contravened s911A of the Corporations Act by carrying on a financial service business without an Australian financial services license.

In December 2021, ASIC filed proceedings in the Federal Court seeking orders restraining Mr. Scholz from promoting or carrying on any financial services business in Australia.

On 16 December 2021, the Federal Court made interim orders by consent that Mr. Scholz is restrained from promoting or carrying on a financial services business.

Those orders were made pending determination of ASIC’s claim for a permanent restraint, which was heard by the Court at a contested hearing in October 2022.

Subscription/membership fees of $500, $1,000 or $1,500

His social media activity as a financial product advisor regarding share trading on the ASX took place between March 2020 and November 2021, always without a license.

According to ASIC, his unlicensed activity included:

• delivering training courses and seminars about trading in ASX-listed securities during which he made recommendations about share purchases
• promoting those courses and seminars on Twitter and Instagram using the handle ‘@ASXWOLF_TS’
• making share purchase recommendations on private online forums (that he administered) and on Instagram.

Sarah Court, Deputy Chair at ASIC, commented: “ASIC has warned those who discuss financial products and services on social media that they could be the subject of enforcement action if they are carrying on a business of providing financial services without a license. Financial services laws exist to protect investors if something goes wrong. The individuals who paid Mr. Scholz for his tips, to attend seminars or access private online forums, as well as those individuals who purchased shares based on his recommendations or statements of opinion, did not have the benefit of these protections.”

Tyson Robert Scholz’s business to paying subscribers included:

• subscription/membership fees of $500, $1,000 or $1,500
• offers of various levels of share trading training, referred to as ‘Stage 1’, and ‘Stage 3’ packages, which were marketed as introductory or advanced seminars
• offers of individual one-off share trading suggestions, or tips for a fee
• the Stage 2 package providing one year’s access to a private chat site, named ‘Black Wolf Pit’, using the online communications platform Discord.

The Judge reviewing the case commented: “…the financial product advice given by Mr. Scholz formed an integral part of this business. The advice which was given by him was not a one-off but formed part of the continuous and systemic business operations by which Mr. Scholz derived profit.

“…through his lifestyle posts and ‘life story’ posts on the Instagram account, Mr Scholz had established a reputation as a successful share trader who had the ability to identify worthwhile companies in which an investment should be made. It did not matter that the stories did not contain any overt recommendation to acquire the shares: it was enough that Mr Scholz referred to a company or its share in the stories, which was usually done in a way which indicated that he liked that company.”