when i first started posting CashNews.cos to youtube about Finance and investing i was really nervous about accidentally providing investment advice on my channel if
you aren’t aware in canada the united states and many other countries around the world it’s actually legal to provide investment advice without being registered and while i’m now currently registered to give advice i wasn’t when i first started the channel and even still i
wasn’t interested in crossing that fine line but as i got more familiar with the youtube Finance space it became pretty clear that this concern was not shared by most
other creators not only were people openly talking about which stocks and Cryptos they liked talking about where they thought there were opportunities and whatnot but they were often times
telling people what exactly to do with their money invest in index funds sell out now before things crash buy dogecoin before it hits three thousand dollars that last one was actually from tick tock but you get the idea it was crazy it’s not that all the advice was necessarily bad or
speculative but the fact that so many people were giving advice in the first place without any issue was honestly mind-boggling how could this be how could all these people be doing what i was told was a cardinal sin in the color: #1a73e8; text-decoration: none;">Finance space then i saw it the apparent key to this onslaught of investment advice the not financial advice disclaimer virtually every popular text-decoration: none;">Finance CashNews.co posted on youtube has this disclaimer in one form or another including my own CashNews.cos mind you it’s kind of ridiculous when you think about it because most of the stuff is financial advice telling people how to invest their money
and what stocks to buy is clearly financial advice and while a lot of people fortunately do focus on providing reasonable guidance on youtube there are some in emphasis here on the sum who really do test the limits you can find some pretty awful advice on the platform from people providing
speculative picks that they think their viewers should go all in on to really just incomplete research only to wash their hands clean with a convenient by the way not financial advice but we haven’t really seen any penalties for people providing this sort of bad advice on youtube which raises
the question does the not financial advice disclaimer really protect people from any liability here for what they tell their viewers or all these youtubers breaking the law well as someone who lives both in the professional and the youtube world of style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance
education i am just a Finance guy reading some rules online and while i will be focusing on u.s federal laws rules can obviously vary from country to country and even state
by state but nonetheless think that it will be helpful to dive into the laws for the biggest market in the world so that viewers can see if they have any protections here and so that youtubers can determine whether they should maybe be checking their phone books for any local law firms ladies and
gentlemen my name is richard coffin and you’re watching the plane bagel to answer the question of whether the not financial advice disclaimer is a real legal defense for youtubers we should first have a better understanding of the law around investing advice as it currently exists and
probably the most applicable law to this conversation is the investment advisors act of 1940 this was a piece of legislation introduced to the u.s after the wall street crash of 1929 which kicked off the great depression as many people believed that the market collapse was partially the result of
widespread speculation fueled by reckless advising from professionals it was said even taxi drivers and shoeshines would talk about which stocks they were trading that day the act essentially made it so that only registered professionals could provide investment advice while at the same time
outlining penalties for providing advice legally in fact under the act people who are not registered can be fined and may even face jail time of up to five years in federal prison if they provide illegal investment advice it can also open you up to civil liability if you illegally recommend a stock
to someone in that position declines you could be sued for the damages and given how many viewers some of these youtubers have that’s kind of a scary prospect but at the same time there’s got to be some leeway here right i mean people talk about stocks all the time and you don’t
see the sec going to water coolers at the office and finding your co-worker for telling you what their favorite picks were where’s the line here well in a 2013 memo the sec outlined three criteria for determining whether someone should be considered an investment advisor someone who if not
registered would be giving a legal advice we’ll start with the most obvious of the three provide advice to others or issue reports or analyses regarding Securities now importantly this line focuses on advice about Securities and not financial advice as a
whole so while the disclaimer not financial advice would include Securities advice and other types of money related things broader suggestions like you should save your money aren’t regulated here which makes sense in fact according to finra you don’t need to be
registered to even be a financial planner and virtually anyone can offer Financial Planning services so long as they don’t advise unregulated areas such as Securities and Insurance and other areas like that even still you can see how that
last part analyses regarding Securities is pretty damning for youtubers it sounds like even just analyzing the stock and giving your thoughts could constitute Securities advice and given how popular that is to do on the platform that could be an issue not only that
but the sec has been very broad historically with what i consider Securities advice so even just sharing a Portfolio of stocks or seeing something high level like you think people should have more stocks than Bonds would likely fall under this
criteria but there is an interesting caveat here that quite honestly saves a lot of people notice that the advice needs to be about Securities now you might be aware that Securities is a broad classification that includes many Investments like
stocks Bonds mutual funds exchange traded funds options and many other publicly traded Investments but interestingly the sec has in the past clarified that Real Estate coins precious metals and commodities are not covered by this definition and
while the sec does evaluate Cryptocurrencies and nfts individually they’ve ruled that bitcoin and ether the two largest color: #1a73e8; text-decoration: none;">Cryptocurrencies are not Securities and that explains a lot probably some of the most audacious advice on youtube has to do with bitcoin and none;">Cryptocurrencies and while we’ve obviously seen a lot of projects pop up that are trying to test the limits and the capabilities of the space there are also a lot of money grabs in the none;">Cryptocurrency area and it appears at this point of clarification would explain why it’s been so easy for people to skirt any liability regarding how these coins are marketed it’s not to say they can’t be found liable for things like fraud anyone can be sued for
promising returns or a pump and dump scheme but when it comes to advising about Cryptos it appears that for many of them it falls outside the legislation here so right away a lot of href="https://cashnews.co/finance" style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance
still seems to apply so let’s move on to the next criteria to see if it applies you provide advice for compensation this is why the sec isn’t rating the wall street bets subreddit for all the hot picks being posted by users yet anyway because it appears that free advice falls outside
the scope here and that makes sense free speech applies even in the world of investing and the sec probably isn’t looking to police every free conversation we have about investing but it raises an interesting question are youtubers providing advice for compensation compared to a professional
advisor who would charge a pretty explicit fee for the service they offer a youtuber’s content is usually free with the youtuber instead being paid at times through advertisements or sponsorships that they decide to take on on their channel does that count well it’s a bit of a gray area
really but the sec has historically interpreted the compensation requirement pretty broadly to refer to any economic benefit regardless of how it’s received it doesn’t matter whether it’s paid directly by the person receiving the advice or not or even if the advice isn’t the
sole reason for the fee a benefit that’s generated in relation to you providing advice is considered compensation so there is a chance this criteria applies but i think the third and final criteria will help further clear this one up you engage in the business of providing advice and the sec
has clarified that quote generally a person providing advice about specific Securities will be engaged in the business unless specific advice is rendered only on a rare or isolated occasion that may be interpreted as meaning that someone who presents themselves as an investment
expert who regularly provides investment advice on their channel and whose investment advice is the reason that many viewers watch their content might meet this criteria but it’s hard to know for sure where that line is does calling yourself an analyst or a guru or some other title of
profession mean that you’re suddenly in the business of giving advice i honestly don’t know but i do think that the criteria is more likely to apply when you get into some of the many perks that youtubers in the color: #1a73e8; text-decoration: none;">Finance space like to offer if for example a youtuber runs a pay gated Portfolio of Securities or even one-on-one coaching sessions with their viewers there’s a chance this criteria would be met now
obviously between this criteria and the other two that we’ve already discussed we’ve already filtered out a lot of people from liability here but even with the not so clear four compensation rule i don’t think it’s a stretch to say that between the various donation and
pay-gated platforms there are likely some financial youtubers out there who have met these three criteria for being registered so why haven’t we seen a youtuber being sued for the advice they provided i knew that i needed some help to better understand what was going on here so i decided to
reach out to someone more familiar with us law than myself jack duffley is another financial youtuber on the platform who i learned works as a commercial Real Estate attorney in the us and while not a Securities law attorney himself he is more familiar with the
youtube Finance space and had actually written a blog post about this very subject so i decided to bug him and see what he thought about all this i passed the question on to
you as someone who actually has a legal background what’s going on here jack so the investment advisors act lays out a number of exceptions anyone who meets one of these exception classes would not have to register under the investment advisors act so they can actually give investment advice
in those limited cases first off we have to decide that yes they are getting paid for financial advice they meet that for compensation requirement so assuming that’s true which isn’t necessarily the case the biggest options would probably be either the the teachers or professionals
exemption that seems like it’d be promising but really the way the the sec has understood and the courts have understood the teachers exemption is that you really have to be a teacher first and then give financial advice as kind of like an outlet think maybe like a business school teacher um
not so much the person whose primary goal on youtube is to give financial content give financial advice and it seems like the publisher’s exemption is probably the best route which allows people to distribute certain publications and give financial advice through those without having to
register okay so i always knew that there were some exemptions for the act here it’s why you can have some professionals like Brokers and mutual fund salesmen who aren’t upheld at the same requirements as fiduciary advisors but i wasn’t as familiar with the
publisher’s exemption but also that one makes sense as well explains why you can have people on cnbc and other news networks sharing stock picks and never really facing any consequence for doing so but does this apply to youtubers i asked jack what it would take for someone to meet this
exemption it was clarified in a pretty big case actually all the way back in the 1980s called low versus sec and in this case this guy low used to be a registered advisor but he got in some trouble so he lost his registration status and then he started selling a newsletter where he was giving stock
tips or otherwise was giving financial advice and was getting paid for it through this newsletter they got all the way up to the supreme court in trying to figure out whether this guy had to register was he giving illegal unregistered financial advice and the supreme court said that this actually
fell under the publisher’s exemption so someone with a paid newsletter because it met these very specific three factors the publication is general and impersonal in nature it’s bona fide a or bona fide as we like to say in america and then the third is that the publication is general
and regular in its circulation so jack then i’ll ask the follow-up question of if you include this disclaimer say as kind of extra security and you assume that you’re protected under these exceptions as we saw in that low case is a youtuber able to say effectively whatever they want
about Investments do you have free reign to talk about anything on youtube when it comes to Securities i think it’s safe to say that you don’t have free rein like it’s you could just say whatever you want it can’t be advice that’s
geared towards a specific person so maybe a viewer comes up to a youtuber and says hey should i invest in this stock and then that youtuber tells that person yes you should invest in that stock specifically it’s like individual advice that probably wouldn’t be okay whereas the general
and impersonal newsletter might be okay and within the act there’s really nothing about a disclaimer saying hey if you do this disclaimer then you’re totally covered you don’t have to register to be an investment advisor it’s not really covered in the act so just because you
disclaim it and say hey this isn’t financial advice it doesn’t just absolve you of all of your sins if you really have sinned under the act and of course he did ask me to include this this is not legal advice i don’t know everyone’s individual situation this is really just
looking at a very high level overview of federal law all right so thankfully it doesn’t sound like youtube is a total wild west when it comes to Finances youtubers can
still be held somewhat liable for being dishonest with what they circulate and in fact while i was working on this CashNews.co the sec actually came out and charged a social media stock promoter for selling out of positions that they were promoting actively on their twitter handle big money mike vi
in his email group team billionaire not the most original names but it goes to show that there are cases coming out against predatory recommendations but regarding financial advice it doesn’t actually look like the not financial advice disclaimer is what’s doing the legwork here it
looks like that between the publishers exemption and that low case ruling from the 80s the law might not even apply in the first place after all advice on youtube is inherently being sent out to a mass audience so of course it’s not going to be considered personalized and if a paid newsletter
can skirt liability some paid youtube groups might even be in the clear here now jack did explain that it’s not to say the disclaimer may not be considered if the case were to make it to court especially in a situation where a youtuber is really towing that line of legality but as jack puts
it i always think that honesty is the best approach as long as you’re honest you’re not secretly saying hey uh i i don’t have an interest in the security but you actually do and then you end up selling it like a pump and dump type type thing as long as you’re honest
that’s step number one then we can kind of start looking at the next steps to make sure that you’re you’re in line with what the law is trying to do but i did notice that this does kind of set a weird precedent for stock picks in the space it obviously sounds like people
can’t provide personalized advice which makes sense because that does take caution and training and whatnot but they’re allowed to provide widespread advice to everyone even if it’s potentially bad now i know that no law is perfect and obviously there are still some protections
being provided here but it’s weird to think that saying tim should invest in this stock is not okay while saying everyone should buy this stock seems to be allowed under the publisher’s exemption regardless it looks like we’ve come to some sort of conclusion regarding the not
financial advice disclaimer there do remain some unanswered questions when it comes to signal groups 101 coaching and other more focused offerings like those but with or without this disclaimer youtubers don’t appear to be considered advisors under the law now this could change at any time
and perhaps we’ll see an interpretation that does bring more liability to the Finance youtube front but for now anyway that’s our understanding of the law now
obviously i’ve really gone in here on youtubers but of course these same concerns apply to major networks as well i also don’t want this to be interpreted as hate against any one financial youtuber who talks about stocks this is not an attempt to gatekeep investment analysis i think a
lot of people do a really good job with the content they put out but i do think it is fair to say that the worst of this bad advice when it comes to Finances can probably be
found on youtube which is why i discussed that platform specifically maybe tick tock is a contender there but you get my point and until the laws are changed it’s largely a viewer beware market so to end on a constructive note i think you should listen to what youtubers have been trying to
tell you their content is not financial advice it might not be appropriate for you or in some cases anyone so don’t copy their Portfolio don’t buy anything they tell you to unless it’s based on your own research you can learn a lot from not financial advice
financial advice but you shouldn’t take financial advice from someone not willing to be held to their word as for youtubers as jack says be honest both in terms of your own interests and your level of expertise and maybe avoid statements about absolutes regarding returns and how successful
certain Investments are going to be as we said plenty of times before only sith deals in absolutes thanks for joining me today i know this CashNews.co was a little different but i hope you did like it if you did please make sure to like and subscribe it does help the channel
tremendously and also check out jack’s channel he was a huge help in putting this CashNews.co together i’ll leave a link to his channel in the description down below i’d also like to pass a question on to you what do you make of all this do you think the system as it currently
exists is perfectly fine or do you think there should be more restrictions on the type of advice people provide online and if i have any legal viewers i’d love to hear your thoughts as well and if you think i’ve missed anything as i mentioned i’m not a lawyer not an attorney
hashtag not financial or legal advice and yeah i’d love to hear what people have to say about the rules that we’ve talked about thank you for joining me today and as always be safe out there
CashNews, your go-to portal for financial news and insights.
I would like to offer at least one bit of legal & financial advice, and that’s that you should go all in on smashing the like button. 👍
Thanks for including me in this one, Richard!
I do stock videos, and I honestly don't want anyone to buy a stock because of what I say. I just like talking about my ideas and I put a lot of work into it. I hope that work is a net positive, in some way, for myself and anyone who watches. It could be for education or entertainment, whatever it may be. I find the idea of the government coming after YouTubers, but not credit card companies that let people max out what they can't afford at 28% or more really ridiculous.
I don't think YouTubers should be held responsible as long as they advise their viewers to do their own research, make their own decisions, or contact a financial advisor. We are constantly being sold something, even by major news outlets, banks, and other institutions. Everyone wants our attention and money. It's crucial for us to learn to be cautious and skeptical, look for conflicts of interest, and remember that ultimately, it's our life and our decision since we are all adults.
Proper risk management with investments, especially with new companies and projects, is essential because we know that most businesses fail within two years. The lack of track records for new ventures should be a red flag, suggesting that perhaps only a small portion of our funds, such as 1%, should be invested. Additionally, we should recall that scams like FTX deceived even the most experienced investors and businessmen, such as Kevin O'Leary. Even hedge funds and professional investors make mistakes. Therefore, proper risk management, examining track records, skepticism, due diligence, and self-accountability are crucial.
On the other hand, we must raise awareness that any public figure with a large audience carries significant influence, whether they are a pop star, actor, politician, or sports player. Whenever they speak in public, they should be aware of how their words can be interpreted and the consequences and risks they carry.
Let's also remember the Nobel Prize effect, where prestigious awards or recognition can lead to an overestimation of expertise in unrelated fields.
I have fallen into traps many times before with gurus, companies, ads, courses, eBay, online marketplaces, scam websites, or suspicious sellers. It's part of being an adult and learning to be cautious and responsible for our actions. I believe we should be taught about online safety and misinformation in schools. While we tend to trust celebrities or figures who are experts in their fields, it's important to scrutinize their backgrounds, just as we do with others. It is becoming increasingly difficult to fact-check information nowadays, as anyone can present themselves in any way they want online, such as on LinkedIn.
And the answer is yes
what I don't understand is when they get at least somewhat successful, it would take a few weeks of work at most to actually get certified, yet most can't be bothered to do even that.
It's great that you reached out to someone with a legal background for a thorough video
I'm surprised that you didn't mention Bitconnect and FTX.
I’m in America….what if I were to start telegram group or discord group to send out my personal trades that I go to take in Forex to a group of people that pay every month to be in it? Would that be against the law do you think?
Common practice is making a paid private group, like Patreon and their ACTUAL "financial advices" are hidden behind a paywall, so authorities cannot see them but their naive followers will…
In my opinion if someone made it absolutely clear that what they are saying isn't advice, and you treat it like it is, then it is just your fault. It would be much more dangerous if people are not allowed to discuss or share information because of idiots who cannot analyse information for themselves. Much like this video – it has provided general valuable information in my opinion, and it has made clear that it isn't legal advice.
very interesting about the legal aspects of contemporary finance etc
Personally I like a lighter hand with legislation and penalties because that runs the risk of arbitrary enforcement.
That said, I’d make a terrible social media guru because I’d want to give more nuanced opinions and clarify that they’re just my opinions. I couldn’t just shout “if you want to get rich in 2024, buy these five stonks now.”
That Financial Education channel guy has the most annoying face in all of Youtube.
I think the lack of disclaimer in the video content can and should land them in civil hot water, esp if they try to give the exact opposite impression: that they have investment advice that should be trusted. To stay out of trouble it's best to follow the example of legal professionals on YouTube, who even before laying out the facts state that it is not legal advice and that you should seek legal counsel from a professional in your jurisdiction. If someone tries to represent themselves in court using information from YouTube, they can only hold themselves liable.
Series 7/66 guy here.
Yes. Yes youtubers are compensated for their advice. The regulations are VERY broad about conpensation, down to even declaring a newly aqcuired friendship as compensation for a stock pick
Great video! Thank you
F.y.i. The disclaimer is for UK law. We have similar requirements teacher/publisher/methodology ect… but you always have to put that disclaimer in as well
I dont understand how you can get "registered" to give advice. Every country has its own rules and licensing, and youtube is an international platform. Who decides what license you need?
This is a great video! 👏 Thanks for all the research, information and work you put into this. It's super helpful while I'm trying to navigate the YouTube, finance, DeFi, and crypto space! 🙏
The point is, no one should be able to give financial advice as though they were a financial advisor if they are not a registered financial advisor. Other than that, everyone should be able to comment whatever they want about stocks, markets et al. Instead of policing content let's make the audience wiser. A disclaimer should be totally fine.
Technically speaking no as long as they quote they're not giving you financial advice. However, I do believe they will rule and pass laws against it and make it illegal regardless very soon, so no one can warn you beforehand. Same reason why they removed the ability for you to see the amount of dislikes, some political figures got way more likes than others. They don't want you seeing what's really going on.