The UK’s Financial Conduct Authority (FCA) has brought charges against nine social media influencers in relation to an unauthorised foreign exchange trading scheme.
Emmanuel Nwanze has been charged with running an unauthorised investment scheme and issuing unauthorised financial promotions.
The FCA alleges that, between 19 May 2018 and 13 April 2021, Nwanze and Holly Thompson used an Instagram account (@holly_fxtrends) to provide advice on buying and selling contracts for difference (CFDs) when they were not authorised to do so.
CFDs are a high-risk investment product used to bet on the price of an asset, in this case the price of foreign currencies.
The FCA also alleges that Nwanze paid influencers Biggs Chris, Jamie Clayton, Lauren Goodger, Rebecca Gormley, Yazmin Oukhellou, Scott Timlin and Eva Zapico to promote the @holly_fxtrends Instagram account to their millions of Instagram followers.
The individuals each face one count of issuing unauthorised communications of financial promotions and will appear before Westminster Magistrates’ Court on 13 June 2024.
Social media influencers are now a key part of the global economy and are used to promote millions of products and services, including for the financial services industry. Examples of financial institutions using influencers to market their products and services include CapitalOne, Starling, banking app Revolut and Monzo Bank.
Regulators are scrambling to keep up with this rapidly growing area of finance and the FCA published its Finalised guidance on financial promotions on social media in March 2024.
“Social media is an increasingly important part of firms’ marketing strategies, and has allowed them to reach a large audience with greater speed and frequency than ever before,” said the FCA. “However, poor quality financial promotions on social media can lead to significant consumer harm due to their wide reach and the complex nature of many financial products and services.”
Similarly, in February, the European Securities and Markets Authority (ESMA) and other “national competent authorities” in Europe published requirements for individuals posting investment recommendations via social media – and warned about the risk of market manipulation. “When posting on social media, transparency and accuracy are key, especially when making recommendations about investments,” says the guidance.
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