TradeZero America Inc., headquartered in Brooklyn, New York, has been censured and fined $250,000.00 by Financial Industry Regulatory Authority (FINRA) because TradeZero America allowed influencers to make misleading communications about the company’s services and had failed to supervise influencers’ communications to investors. Letter of Acceptance, Waiver, and Consent No. 2021072581301 (June 10, 2024).
According to the AWC, between 2020 and 2022, TradeZero America engaged social media influencers to promote its services. These influencers were paid to create content that often contained promissory and exaggerated claims, failing to present balanced and fair information. Those statements implied unrealistic success from using TradeZero’s services, violating FINRA Rules 2210(d)(1)(A) and 2210(d)(1)(B) as well as Rule 2010.
TradeZero America also did not review or retain records of the influencers’ content before they were published on social media. Securities Exchange Act of 1934 Rule 17a-4(b)(4) and FINRA Rule 4511 require securities broker dealers to preserve records of communications related to their business.
During the same period, TradeZero America failed to create and implement a supervisory system, including written procedures reasonably designed to oversee its influencers’ communications. The firm’s procedures did not require a principal to review and approve the influencer’s videos before posting. Therefore, TradeZero violated FINRA Rules 3110(a), 3110(b), and 2010.
