TikTok ‘finfluencers’ under scrutiny amid pump and dump concerns
September 15, 2021 6:39 am
The corporate watchdog is undertaking a review of “selected” financial influencers on TikTok and other social media platforms.
This is due to a boom in millennial and Gen Z interest in online investment platforms and concerns over the growth in pump and dump schemes
The watchdog is also considering updating its regulatory guide on internet discussion sites to clarify rules of engagement for “finfluencers” on social media.
The Australian Securities and Investments Commission (ASIC) confirmed its review of some “finfluencers” in an answer to a question on notice from a recent hearing on the oversight of ASIC, which asked whether the regulator was undertaking any compliance action or overview of TikTok financial influencers.
“We are currently undertaking a review of selected financial influencers (‘finfluencers’) to understand their business models and how the financial services law applies to this activity.
“Our selection of finfluencers is not targeted specifically at TikTok, although it is being included in the review as we note that some of the finfluencers have a presence on TikTok.”
ASIC has been grappling with the huge increase in “youth” investors as low-cost online trading platforms increase access to markets, at a time when stock markets around the world and other assets like cryptocurrencies are booming.
Last year, an army of younger investors in the US banded together on news aggregation and discussion site Reddit to drive up the price of GameStop to ‘squeeze’ the hedge funds that were betting on the share price of the company going down.
The flurry of investing activity by younger traders has led to a dramatic increase in the number of social media influencers seeking to promote themselves along with their favourite stocks and types of investments products.