In the latest case involving what are known as “finfluencers“, the FCA has charged nine people regarding an unauthorized foreign exchange trading scheme promoted on social media, as we highlighted this morning.
Between 19 May 2018 and 13 April 2021, Emmanuel Nwanze and Holly Thompson reportedly used the Instagram account @holly_fxtrend to issue advice on buying and selling contracts for difference (CFDs) without authorization.
CFDs are a high-risk investment product used to bet on the price of an asset, in this case the price of foreign currencies. According to the FCA, 80% of customers lose money when investing in CFDs because of the risks. The regulator has imposed restrictions on how CFDs and CFD-like options can be sold and marketed to retail customers.
Instagram accounts
The FCA also alleges that Mr Nwanze paid Biggs Chris, Jamie Clayton, Lauren Goodger, Rebecca Gormley, Yazmin Oukhellou, Scott Timlin and Eva Zapico to promote the @holly_fxtrends Instagram account to their Instagram followers, which combined total 4.5 million. The nine had appeared in various reality TV shows.
Mr Nwanze faces one count of breaching the General Prohibition under Section 19 of the Financial Services and Markets Act 2000, and one count of unauthorized communications of financial promotions under Section 21 of the Financial Services and Markets Act.
Ms Thompson, Mr Chris, Mr Clayton, Ms Goodger, Ms Gormley, Ms Oukhellou, Mr Timlin and Ms Zapico each face one count of unauthorized communications of financial promotions under Section 21 of the Financial Services and Markets Act 2000.
Communicating unauthorized financial promotions is an offence under Sections 21 and 25 of the Financial Services and Markets Act 2000 punishable upon conviction by a fine and/or up to two years’ imprisonment.
They will all appear before Westminster Magistrates’ Court on June 13.
In March, the FCA published guidance on financial promotions on social media. “We want firms to ensure that promotions provide a balanced view of the benefits and risks, and clearly communicate information that will help consumers make effective, well-informed decisions”, it said.
“Unauthorized persons, such as social media influencers, who promote a regulated financial product or service without approval of an appropriate FCA-authorised person may be committing a criminal offence.”
