The European Securities and Markets Authority (ESMA) and National Competent Authorities have issued a stern warning regarding the posting of investment recommendations on social media platforms. The Market Abuse Regulation (MAR) has been highlighted as the cornerstone framework governing such activities, aiming to curb market manipulation and ensure transparency and accuracy in financial communications.
European Regulators Issue Warning
According to the authorities, any public communication, including posts, videos, or other forms of social media content, that provides advice or ideas regarding the buying or selling of financial instruments or portfolio composition falls under the definition of an investment recommendation as per MAR guidelines. This includes both technical and non-technical language, emphasizing the broad scope of the regulation.
Key requirements outlined within the MAR framework necessitate the identification of recommendation producers, including their names, job titles, and the timestamp of the recommendation. Moreover, transparency mandates objective presentations of recommendations, distinguishing facts from interpretations, estimates, and opinions. Sources of information must be reliable and clearly disclosed, addressing any doubts promptly.
Crucially, disclosure of conflicts of interest is paramount, ensuring investors are aware of potential biases. Recommendations disseminated across various social media channels must include explicit disclosure of interest or conflicts of interest, emphasizing transparency and accountability in financial discourse.
Mandatory Disclosure Requirements for Investment Recommendations
Further obligations apply to professionals and experts, including the provision of valuation methodologies, underlying assumptions, and appropriate risk warnings. Disclosure of the investment's duration, frequency of updates, and any subsequent amendments post-disclosure are also mandated. Additionally, holders of net long or short positions exceeding 0.5% of the total issued share capital must declare their positions.
Non-compliance with these regulations exposes individuals to a range of sanctions, with National Competent Authorities empowered to impose administrative or criminal penalties. The severity of sanctions may vary across member states, highlighting the importance of adhering to MAR guidelines to mitigate legal and reputational risks.
In light of these developments, finance influencers, technical experts, and individuals engaged in financial discourse are urged to familiarize themselves with MAR regulations and exercise prudence when disseminating investment recommendations on social media platforms.
