The Financial Industry Regulatory Authority announced that it has censured and fined Moomoo Financial Inc., an online trading platform formerly known as Futu Inc., $750,000 for alleged violations of FINRA advertising rules and supervisory obligations concerning the firm’s use of social media influencers.
FINRA stated that from January 2020 through the present, Moomoo paid social media influencers to promote the firm on social media sites. The communications posted by the influencers were not fair and balanced, or they made claims that were promissory or misleading. For example, Moomoo’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.
FINRA also said that from January 2020 through September 2022, the firm failed to have a registered principal review and approve influencers’ content. From January 2020 through November 2021, FINRA alleged that Moomoo did not maintain records of its influencers’ communications, including the dates the communications were used, the name of the registered principal who approved the communications, or the date of approval. The firm also failed to file options communications, where required, with FINRA’s advertising regulation department.
As a result, the company violated several FINRA rules, including Rule 2210 which requires that “all member communications be based on principles of fair dealing and good faith, be fair and balanced, and provide a sound basis for evaluating the facts regarding any particular security, industry or service.”
Additionally, FINRA reported that, from January 2018 until December 2021, Moomoo failed to provide initial and annual privacy notices to approximately 450,000 customers, as required by Regulation S-P, which, among other requirements, includes “that firms provide, at the beginning of a customer relationship, a clear and conspicuous notice to the customer that accurately reflects the firm’s privacy policies and practices.”
Without admitting or denying the claims, the company agreed to a censure and a fine of $750,000. The firm will also, within 180 days, undertake an effort to remediate these issues and implement a supervisory system in order to achieve compliance with FINRA rules.
Headquartered in Jersey City, N.J., Moomoo Financial Inc. provides self-directed trading to retail investors through its online portal. The firm has approximately 40 registered representatives.
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