Submitted by nsscadmin on
Last week we began a look at the securities laws that apply to finfluencers and the content they make. This week we conclude that short series by looking specifically at the general advice exemption that may apply to finfluencers to exempt them from registration.
The general advice exemption is found in National Instrument 31-103: Registration requirements, exemptions, and ongoing registrant obligations. Specifically it is found under section 8.25 of 31-103, “Advising Generally.”
The pieces of section 8.25 that best relate to finfluencers and their ability to be exempt from registration states:
“The adviser registration requirement does not apply to a person or company that acts as an adviser if the advice the person or company provides does not purport to be tailored to the needs of the person or company receiving the advice.”
So, for example, if a finfluencer is recommending a specific stock, ETF or other security they can be exempt from exemption is that recommendation is not being directed or created for a specific individual.
In the joint guidance issued by the CSA and CIRO it provides as example of how this exemption can and cannot potentially be used by finfluencers in scenario #1 depicting Flora the florist. At first Flora is delivering short videos on basic investments that do not provide specific recommendations or advice and would not require registration. Flora then progresses to a one-hour course that at first only provides general information and not advice. The course is expanded to include stock buying recommendations, but the general advice exemption can apply as the recommendations are not tailored to individual course users. Flora goes one step further and begins receiving and sending direct messages from users looking for investment recommendations. As these recommendations are personalized advice, Flora cannot rely on the general advice exemption and registration would likely be required.
One final thing to remember; even if a finfluencer is relying on the general advice exemption to be exempt from registration, if they are being compensated for promoting or recommending a security, firm, or trading platform they must fully disclose that compensation. Exemption from registration, does not exempt you from the other required disclosure requirements.
If you are a finfluencer and your worried that your online activities may require registration or may be covered by securities laws, you should consult with a securities lawyer or contact your local securities regulator.