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Photo: Bloomberg

The SEC Slaps Financial Influencers; Seven Seven Six Backs Startup July

By  |  Dec. 14, 2022 3:50 PM PST
Photo: Photo: Bloomberg

Financial influencers often like to attach disclaimers on their accounts, advising their Twitter followers and YouTube subscribers that their statements don’t amount to financial advice. Securities regulators have a retort: Those disclaimers are pointless when it comes to plain old fraud. 

The Securities and Exchange Commission on Wednesday charged seven influencers with securities fraud for using their Twitter profiles and chat rooms on Discord to earn illicit profits. The SEC said that over a period of at least two years starting in early 2020, they encouraged their followers to buy certain stocks, and after those share prices rose, the influencers dumped the stocks—all without disclosing their plans to followers. The agency charged an eighth influencer with aiding and abetting the scheme by promoting the other seven in his podcast, “Pennies: Going in Raw,” produced by iHeart Radio and shown on YouTube.

The creators “used social media to amass a large following of novice investors and then took advantage of their followers by repeatedly feeding them a steady diet of misinformation,” Joseph Sansone, chief of the SEC enforcement division’s market abuse unit, wrote in a statement. The agency said the influencers generated $100 million in fraudulent profit. 

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