The Financial Industry Regulatory Authority (FINRA) fined Chicago-based financial technology company M1 Finance $850,000 as part of a settlement addressing alleged improper use of a social media influencer program.

M1 paid influencers to post promotions that were “not fair and balanced,” thus violating FINRA Rules 2210 and 2010, the self-regulatory organization announced in a press release Monday. The case marks the first of its kind by FINRA regarding violations of social media promotion rules, which were highlighted in targeted firm examinations starting in September 2021.

M1 agreed to a censure and certain remedial measures to comply with FINRA Rule 2210 in reaching settlement.

The details: Between January 2020 and April 2023, M1 paid influencers to post claims that were “exaggerated, unwarranted, promissory, or misleading,” FINRA alleged in its consent order.

M1 did not review or approve the content in the influencers’ posts or retain those communications, per the order. It did not have a reasonable system, including written procedures, for supervising the communications influencers made on its behalf.

For example, an influencer falsely advertised M1’s margin lending program could “‘pay [margin loans] back at any given time … there is no set time period,’” when investors who used margin were not entitled to any extension of time to meet the firm’s requirements, FINRA said.

Compliance considerations: Within 180 days, M1 agreed to certify it remediated the issues in the order and implemented a supervisory system, including written procedures, reasonably designed to achieve compliance with Rule 2210.

M1 did not respond to a request for comment. The firm settled without admitting or denying FINRA’s findings.