On 6 February 2024, the European Securities and Markets Authority (ESMA) issued a warning for people posting investment recommendations on social media.
The warning is made by ESMA and Member State competent authorities who note that social media is playing a key role when used to disseminate, share and discuss information about financial markets and investment strategies. The warning is intended to raise awareness of the requirements established under the EU Market Abuse Regulation (MAR) which apply when posting investment recommendations on social media.
The warning describes at a high level what is meant by an investment recommendation and the applicable regulations. It also contains several key messages to those posting on social media, which are outlined below:
- Take care when sharing any opinion in relation to the value or price of a financial instrument or recommend an investment strategy, even where you aren’t using technical language. Additionally, if you post a communication with an ‘educational purpose’, it is better to use historical data and past examples, as to not lead investors to base their investment choices on the information.
- When posting an investment recommendation, you must comply with the requirements in the MAR framework. Spreading false or misleading information on social media can constitute a serious offence that can be criminally prosecuted in some Member States.
- Be aware that the obligations you may be subjected to will vary according to who you are and your activity. Prohibitions of insider dealing, market manipulation and unlawful disclosure of inside information always apply to everyone, independently of one’s MAR category.
- Some communications can carry risks of market manipulation, insider dealing and unlawful disclosure of inside information. Consumers should remain aware of suspicious posts and invitations to take part in strategies aimed at creating trends.
The warning provides practical examples and then concludes by setting out three simple steps for those posting financial communications on social media, these are:
- Gather sufficient information.
- Follow the rules under MAR.
- Be aware and raise awareness of potentially suspicious posts.