Open to the Public Investing, Inc.

Open to the Public Investing, Inc. was fined $350,000 for paying individuals with followings on social media sites to promote the firm in social media communications, some of which included statements that were not fair and balanced or made claims that were misleading or unwarranted.

The findings stated that the firm paid influencers either a fee for each post they created promoting the firm or a fee for every new account that was opened and funded by a customer using a unique referral link provided by the firm. The firm did not limit the compensation influencers could earn. The influencers’ posts were widely distributed, and customers opened and funded more than 23,000 new accounts with the firm using the unique referral links provided to influencers.

The firm’s influencers posted communications claiming that the firm offered “commission free trades” but did not disclose that other fees may apply or provide a link to the firm’s fee schedule. In addition, some influencers promoted the ability to buy fractional shares through the firm but did not disclose certain limitations associated with investing in fractional shares, including, for example, that fractional shares may not be transferable to another broker-dealer.

Further, several posts also failed to clearly identify the communications as paid advertisements.

The findings also stated that the firm did not have a registered principal review and approve all influencers’ static posts promoting the firm prior to posting on social media platforms.

The firm also did not maintain a copy of all influencer posts promoting the firm or the name of any registered principal who approved the communication and the date of approval (where applicable).

The findings also included that the firm failed to establish, maintain, and enforce a system, including WSPs, reasonably designed to supervise its obligations with respect to its influencers’ retail communications. As a result, the firm was unable to review and approve the content of all influencer communications.

In addition, the firm did not establish or maintain a supervisory system reasonably designed to preserve records related to the influencers’ communications.