Moomoo Financial Inc., formerly known as Futu Inc, has agreed to pay a fine of $750,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).
From January 2020 through the present, Moomoo Financial paid individuals with followings on social media sites (commonly known as “influencers”) to promote the firm in social media communications. Such influencers posted social media communications on the firm’s behalf that were not fair and balanced or made claims that were promissory or misleading.
Therefore, Moomoo Financial violated FINRA Rules 2210(d)(1), 2210(e), 2220(d)(2)(A), and 2010.
From January 2020 through September 2022, Moomoo Financial failed to have a registered principal review and approve influencers’ static content (such as videos) or options communications prior to posting on social media platforms and failed to review posts made by influencers in online interactive electronic forums.
From January 2020 through November 2021, the firm also did not maintain records of its influencers’ communications, the dates the communications were used, or the name of the registered principal who approved the communications or the date of approval (where required). Nor did the firm file options communications with the Advertising Regulation Department of FINRA, where required.
From January 2020 through the present, Moomoo Financial also failed to establish, maintain, and enforce a system, including written supervisory procedures (WSPs), reasonably designed to supervise social media communications disseminated on the firm’s behalf by the firm’s influencers and related recordkeeping and filing requirements.
Therefore, the firm violated the Securities Exchange Act of 1934 Section 17(a), Exchange Act Rule 17a-4(b)(4), and FINRA Rules 2210(b), 2220(b), 2220(c), 4511, 3110, and 2010.
In addition, from January 2018 until December 2021, Moomoo Financial did not provide a copy of the firm’s privacy policy to approximately 450,000 customers at the time the customers opened brokerage accounts at the firm.
During that same period, the firm also failed to provide annual privacy notices to those customers. As a result, the firm violated Regulation S-P of the Exchange Act Rule 4 (17 CFR § 248.4), Regulation S-P Rule 5 (17 CFR § 248.5), and FINRA Rule 2010.
On top of the fine, the firm has agreed to a censure and an undertaking that a member of its senior management who is a registered principal of the firm must certify in writing that the firm has remediated the issues and implemented a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with FINRA Rules 2210 and 2220.
