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'Inconspicuous' social media posts, advertorials by B.C. stock promotion firm violated rules
Stock Social Inc. was found to be in violation of rules governing the disclosure of promotional materials for public companies, including via social media networks.
Graeme Wood Graeme Wood
Feb 9, 2023 2:45 PM

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Stock Social advertorials — which were disseminated on news wires, websites and social media — were written mostly like news articles but did not make proper disclosures, the B.C. Securities Commission found.Aleksandr Zubkov/Moment/Getty Images
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For the first time in its history, a B.C. Securities Commission panel has ruled a B.C. stock promotion firm violated the province's securities regulations by not being transparent with its promotional materials.

Stock Social and its CEO Kyle Alexander Johnston admitted they repeatedly violated regulations by not adequately disclosing that it distributed online advertorials, via social media platforms, to promote the purchase or sale of securities of five B.C. companies, a commission panel said Jan. 30.

Between 2016 and 2018, Stock Social, one of numerous marketing companies in B.C. commonly called a stock tout, was paid more than half a million dollars from the five companies combined, to write articles promoting corporate activities.

However, the commission stated, “These advertorials — which were disseminated on news wires, websites and social media — were written mostly like news articles but they did not disclose risks or any other negative factors about the issuers that one would expect from objective reporting.”

The B.C. Securities Act requires such advertorials to contain certain elements of “clear and conspicuous” disclosure, which did not occur in these instances, the panel found in its administrative case.

“None of the advertorials made clear that they were distributed on behalf of the issuers, and although some indicated a fee had been paid for dissemination, they did not say on whose behalf. When disclaimers did appear, they were not placed in a prominent place for the reader to easily notice,” the commission stated in a news release.

The commission stated this is the first BCSC panel decision of a B.C. Securities Act violation “regarding clear and conspicuous disclosure” of stock promotion materials.

The regulations have been in place since 1995. The commission has previously reached two settlements on such matters, in 1997.