The European Securities & Markets Authority (ESMA) issued a cautionary statement on 6 February 2024 regarding the posting of investment recommendations on social media platforms. It highlighted the requirements set out by the Market Abuse Regulation (MAR) which aims to improve investor protection and market integrity, emphasising how failure to comply with the requirements can result in administrative and criminal sanctions.

Investment Recommendation

An investment recommendation is defined quite extensively by the MAR framework, though it can be summarised as the use of any form of public communication such as social media to:

Provide direct or indirect advice regarding the purchase or sale of a financial instrument, or how to compose a portfolio of financial instruments.
Express an opinion on the future price of a share or any other financial instrument.

General MAR Requirements

Individuals must ensure their investment recommendation:

Specifies the identities of the investment producers:
- Names, job titles of all individuals involved, and the date and time of the recommendation.
Guarantees an unbiased presentation of investment advice:
- Distinguishing facts from interpretations, estimates, and opinions. Verifies the reliability of all information sources and clearly indicates any uncertainties.
Transparently discloses any conflicts of interest for investor awareness.

Risks

Sharing investment recommendations on social media platforms poses risks associated to market abuse such as:

Unlawful disclosure of confidential information.
Insider dealing arising when an individual utilises confidential information to buy or sell financial instruments related to that information.
Market manipulation due to provision of inaccurate or deceptive information about the value, demand, and supply of a financial instrument.

Press Release: https://www.esma.europa.eu/press-news/esma-news/requirements-when-posting-investments-recommendations-social-media