A consultant, a mining company and a CBD distributor have been fined in B.C. for failing to disclose when they paid for promotional social media content, including posts shared by influencers.
The BC Securities Commission released details of three similar settlement agreements on Tuesday.
In each case, a company called Stock Social was hired to conduct “investor relations activities” including creating advertorials and social media posts. In cases where this kind of content is created and distributed at the behest of a company, the financial markets regulator requires a publicly-traded company “to clearly and conspicuously disclose” that fact, the BCSC notes in each of the announcements of the settlements.
In the first case, Chad McMillan, a consultant hired by a virtual reality company called ImagineAR Inc., was fined $10,000. The content he hired the marketing company to produce included an advertorial that “was written in the style of a news article designed to look and read like objective journalistic content” as well as posts shared by six influencers in 2017 and 2018.
In the second, John-David Alexander Belfontaine, the CEO of a CBD food and beverage distributor called Phivida Holdings Inc, was fined $10,000 for similar activity. In this case, the BCSC found that Belfontaine personally reviewed advertorials and Facebook posts but did not “correct the deficiencies” by directing the marketing company to add the required disclaimer.
In the third, a $35,000 fine was handed down. MGX Minerals Inc. and CEO Jared Michael Lazerson hired the marketing company in 2017 to create six advertorials and to engage 17 influencers to promote the content on Twitter, Facebook, and LinkedIn.
“The advertorials were written to look and read like objective journalistic content. Some of them inconspicuously directed readers to a disclaimer on another website,” the settlement agreement reads.
“Others indicated a fee had been paid, but did not identify who paid, or who was paid, for the content. Some indicated MGX as the source, but stated the author was a third party and that the content was not reflective of the company’s opinion.”
The company was fined $25,000 and Lazerson was fined $10,000.
In all of the cases, those involved admitted the misconduct, pre-empting the need for the matter to go to a hearing.