Securities Regulation Daily Wrap Up, NASAA NEWS AND SPEECHES—NASAA letter to FINRA highlights risks regarding social media-influenced investing, (May 18, 2026)

By R. Jason Howard, J.D.

Both the industry and regulators need to be diligent in addressing the epidemic of scams affecting investors, much of which finds its way to investors through social media.

In a letter to FINRA concerning social media-influenced investing, NASAA states that “social media presents extraordinary opportunities for industry and regulators to reach investors,” but it cautions that there are risks that “need to be recognized and considered to fully realize the potential of social media to empower investors while at the same time making sure their interests are protected.”

The NASAA letter responds to a FINRA research report entitled Social Media-Influenced Investing, which “summarizes findings from FINRA’s research to assess the impact of social media on investing,” and states that the report “reasonably posits that social media platforms may provide a faster and more efficient way to disseminate financial information that is in line with the preferences of younger generations.”

NASAA espouses the belief that “it is a good thing for broker-dealers to provide general investment information through social media,” and “encourages firms to provide sound educational content, as well as helpful information such as where to find your regulators and how to learn about your financial professionals,” but cautions that “the promise of social media as a tool to empower sound investing is accompanied by unique challenges.”

Considering those challenges, the letter discusses: (1) how uninformed finfluencers can harm followers; (2) how social media platforms can amplify misleading content and promote risky behaviors; and (3) how finfluencers may have undisclosed conflicts of interest.

The letter also states that broker-dealers should focus on content quality when using social media and working with finfluencers and explains that social media content and finfluencer posts may constitute recommendations pursuant to Regulation Best Interest and similar state conduct standards. NASAA also cautions that broker-dealers “should always be mindful of the intended audience for social media communications especially when the audience may include vulnerable persons or senior investors,” and states that both the industry and regulators need to be diligent in addressing “the epidemic of scams affecting investors, much of which finds its way to investors through social media.”

NASAA also explains that broker-dealers can be responsible for certain third-party communications and that broker-dealers can have supervision and recordkeeping responsibilities for certain third-party communications.

The letter concludes with NASAA stating that “the roles of social media and finfluencers in the dissemination of financial information and advice is an area that deserves sustained attention” and because of that, NASAA thanked FINRA for its “thoughtful approach to understanding these issues and learning from its members what opportunities they are finding and what challenges they are facing.”

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