Australian Finfluencers warned of jail time for posting finance advice

abdelaziz Fathi

The Australian Securities and Investments Commission (ASIC) warned social media influencers that they could face up to five years in jail if they continue to promote risky and sometimes fraudulent investments to often inexperienced consumers.

The corporate watchdog issued a public statement advising firms to be cautious when engaging so-called “finfluencers” and conduct serious due diligence on any prospective partners. It says those promoters must be licensed to give financial advice, or are authorised representatives of advisers. The same rules apply to influencers who earn affiliate commissions for referring their pages’ followers to online brokers, which also requires a licence to give such advice.

“Carrying on an unlicensed financial services business is an offence under the Act, unless authorised as a representative of a licensee or relying on an exemption. The Act imposes significant penalties, including up to five years’ imprisonment for an individual and financial penalties into the millions of dollars for a corporation,” a new information sheet reads.

These warnings were in response to a rise in unregulated trading offers on online forums, and a concern that retail investors are not aware of the risks associated with following such tips, ASIC said.

Influencers have significant power among younger people

A 2021 ASIC survey revealed that 33% of 18 to 21-year-olds use social media sites to get financial advice from influencers. In comparison, only three percent of people under the age of 25 have used paid financial advice to keep them in the green. Other findings also showed that two thirds of people in the same age bracket changed a financial behavior because of a celeb.

TikTok and other social media influencers, however, do not have the necessary accreditation or qualifications to offer these services, though they promise very lucrative and sometimes guaranteed returns. They also need to meet certain educational standards and manage conflicts of interest, amongst other requirements.

Tips garnered online to young investors via social media may be inaccurate, the watchdog warns, while advice from financial celebrities can come with a good deal of risk when deciding where to park their money.

ASIC Commissioner Cathie Armour said: ‘The way investors access information is changing. It is crucial that influencers who discuss financial products and services online comply with the financial services laws. If they don’t, they risk substantial penalties and put investors at risk.’

The regulator added that investment recommendations had to be produced in an objective and transparent way, so that investors could distinguish fact from opinions.

Read this next

blockdag

Top Bullish Crypto: Fetch.ai & Pepe Coin Price Surge, But BlockDAG Sees Investor Rush as X Series Miners Stand Out

Compare Fetch.ai (FET) Bull Run, Pepe Coin price, and top bullish crypto BlockDAG. Discover why BlockDAG’s innovation and growth potential make it the best choice.

Digital Assets

Coinbase resumes XRP trading in New York after nine-month hiatus

Coinbase has resumed trading for XRP in New York, the company’s chief legal officer, Paul Grewal, announced on Thursday. This comes after a nine-month suspension of the cryptocurrency on the exchange due to regulatory scrutiny.

Institutional FX

Swissquote joins Fortex Hub to expand liquidity distribution

ECN trading platform and technology provider, Fortex Inc. has announced a new integration with Swissquote Group, Switzerland’s provider of online trading services.

Chainwire

Multipool Enters Partnership with Mobilum Offering Users Fiat to DeFi On/Off Ramp

Multipool, a leading innovator in the blockchain and cryptocurrency industry announces a corporate partnership with Mobilum.

Retail FX

IC Markets taps TipRanks’ trading research tools

Sydney-based IC Markets has completed integration of TipRanks’s rating tools, which ranks analysts and financial bloggers based on their picks’ performance analysis, in a bid to provide its clients with new research capabilities.

Digital Assets

Gate.io shelves plan to operate in Hong Kong

Gate Digital Ltd (Gate HK) announced it is winding down operations and has withdrawn its application for a crypto trading platform license in Hong Kong.

Chainwire

Sui and Mesh Combine Forces to Bring Simplified Transactions Across the Sui Ecosystem

With the addition of the Mesh platform, Sui Wallet will achieve product parity with the world’s largest self-custody wallets, while Mesh now natively supports the SUI token

Market News, Tech and Fundamental, Technical Analysis

EURGBP Technical Analysis Report 23 May, 2024

EURGBP currency pair can be expected to rise further toward the next resistance level 0.8560.

Digital Assets

Bybit denies financial woes and hacking rumors

Ben Zhou, CEO of Dubai-based cryptocurrency exchange Bybit, has refuted circulating rumors that the platform has been hacked or is insolvent. Zhou addressed the speculations in a post on the social media platform X.

<