ESMA Warns About Posting of Investments Recommendations on Social Media

The European Securities and Markets Authority (ESMA), the EU's financial markets regulator and supervisor, and National Competent Authorities today (6 February 2024) have issued a warning regarding the posting of posting investment recommendations on social media, pursuant to the Market Abuse Regulation (MAR).

The authorities have also warned about the risks of market manipulation in such publications.

ESMA​ clarifies that, according to the MAR, an investment recommendation can be any post, video, or any other type of public communications, including social media, in which a person gives advice or ideas, directly or indirectly, about buying or selling a financial instrument or on how to compose a portfolio of financial instruments.

The critical requirements set in the MAR include the illustration of the identification of the investment recommendations producers, including name, job title of all the persons involved., and the date and time of the recommendation.

Besides, the person producing investment recommendations is required to ensure the objective presentation of investment recommendations, and disclose any conflicts of interest in a clear way.

The MAR requires "professionals" and "experts" to disclose the length of time of the investment and an appropriate risk warning, the planned frequency of updates to the recommendation, etc.

If the producers do not meet the relevant requirements, they are exposed to sanctions. Aadministrative or criminal sanctions imposed by National Competent Authorities may vary according to the member state for certain types of infringements.

"When posting on social media, transparency and accuracy are key, especially when making recommendations about investments. That is why, if you are a finance influencer, a technical expert, or someone with just interest in financial investments, you need to be aware of the rules established under the MAR Framework and be able to recognise an investment recommendation," ESMA notes.