Paid social media posts result in BCSC sanctions

The British Columbia Securities Commission (BCSC) is holding executives and a company accountable for failing to disclose that social media posts touting the company were paid marketing work.

A BCSC hearing panel approved a settlement with MGX Minerals Inc. and CEO Jared Michael Lazerson that will see them pay a combined $35,000 to resolve allegations.

According to the regulator, MGX hired Stock Social Inc. in 2017 to conduct investor relations activity — including six online advertorials and multiple promotional posts by social media influencers on platforms such as Twitter, Facebook and LinkedIn.

“None of the social media posts disclosed they were issued on behalf of MGX,” the BCSC said in a release.

While the advertorials included some disclosure, some of them didn’t identify “who paid, or who was paid, for the content.”

In settling with regulators, the company admitted to violating securities rules by not ensuring compliant disclosure. It must pay $25,000. Lazerson admitted to his role in the violation and agreed to pay $10,000.

The BCSC also settled with a couple of other Stock Social clients who hired the company for investor relations work, including social media posts and online advertorials.

Once again, the posts and advertorials didn’t disclose that they were produced on behalf of the companies, the BCSC said.

In one settlement, Chad David McMillan, who was a senior strategic advisor at ImagineAR Inc., agreed to pay $10,000; in the other, John-David Alexander Belfontaine, the former president, CEO and director of cannabidiol distributor Phivida Holdings Inc., agreed to pay the same amount.

Earlier this year, the BCSC settled with a couple of other Stock Social clients for similar allegations.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.