Avenue Securities LLC has agreed to pay a fine of $300,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).

From January 2020 through March 2023, Avenue Securities’ affiliate arranged with approximately 25 influencers, all of whom were based in Brazil, to promote the firm and its affiliated companies to potential retail investors in Brazil through social media platforms, including in static video posts and in online interactive electronic forums.

Influencers were chosen to participate in Avenue’s influencer marketing program based on the relevance of the influencers’ social media content to the firm’s business. Avenue Securities’ foreign affiliate paid the influencers a fixed monthly fee for “content” that promoted the Avenue brand, including the firm’s products and services, on social media.

The influencers’ social media posts promoting the firm were retail communications of the firm and subject to FINRA Rule 2210. Pursuant to arrangements with the influencers, influencers were required to produce content promoting the Avenue brand, which included the firm’s services.

One such arrangement required one of the influencers to create a series of posts relating to investing in the U.S. and specified that the content of the posts include topics such as “Starting to Build the Portfolio – Investing in the US” and “Types of Investment and how to adapt the 500 strategy.”

The firm also provided to influencers “Conduct Rules,” which included guidelines for creating posts and examples of acceptable content—such as “With Avenue, when you invest $1 in the North American market you may have the possibility of saving $$” or “Avenue makes it easy to start your [INVESTMENTS/LOANS/ETC.] in the North American market.”

The influencers created social media posts promoting the firm and its affiliates that were not fair and balanced or contained claims that were promissory or misleading.

For instance, in one video, an influencer encouraged viewers to invest in real estate investment trusts, stating, “they pay, yes, every month. It always pays a dividend.”

Other posts similarly suggested that investments in certain securities would guarantee dividend income without disclosing the risks inherent in investing. The influencers also promoted investment in U.S. markets with the promise of investment success.

For example, in one video, an influencer stated, “If you pray in English, your blessings come in dollar . . .And if you invest in the best stock exchange in the world, the returns too!”

Other posts also used promissory and misleading hashtags, such as #GetRich, #Millionaire, or #ExtraIncome, that suggested investors would get wealthy or earn money from their investments. Several posts also promoted specific registered ETFs without including information and disclosures required by Securities Act Rule 482.

Finally, some posts encouraged potential investors to purchase crypto assets but did not clearly explain the risks of the investment, including that investors could lose their entire investment amount.

Some of the influencers also described Avenue Securities as “free”, “completely free of charge”, or “zero fee” without disclosing that certain fees may apply or providing a prominent link to Avenue Securities’ fee schedule. Additionally, many of the influencers’ posts failed to clearly identify the communications as paid advertisements.

Therefore, Avenue Securities violated FINRA Rules 2210(d)(1), 2210(g) and 2010.

From January 2020 through March 2023, Avenue Securities did not have a registered principal approve influencers’ static posts promoting the firm prior to use, nor did the firm maintain records of influencer communications or the dates the communications were used in accordance with FINRA Rule 2210.

In addition, from January 2020 to February 2021, the firm did not review influencers’ posts made on behalf of the firm in online interactive electronic forums.

Therefore, Avenue Securities violated Section 17(a) of the Exchange Act, Exchange Act Rule 17a-4, and FINRA Rules 2210(b), 4511, and 2010.

From January 2020 through March 2023, Avenue Securities did not establish, maintain, and enforce a system, including WSPs, reasonably designed to supervise retail communications posted by influencers engaged to promote the firm for compliance with FINRA Rules 2210(d)(1) and 2210(g). While the firm’s written policies and procedures required principal review and approval of retail communications, the procedures did not provide guidance about when influencer communications were retail communications of the firm.

As a result, the firm did not require a principal to review and approve influencers’ static posts related to the firm prior to their publication, nor did they require review and supervision of influencers’ posts made on the firm’s behalf in online interactive electronic forums in the same manner as the firm reviewed and supervised correspondence, as required by FINRA Rules 2210(b)(1)(A) and (D).

Further, during this period, the firm did not review influencers’ static posts prior to posting, nor did they reasonably supervise and review influencers’ posts made on the firm’s behalf in online interactive electronic forums.

Also, Avenue Securities also did not establish or maintain a supervisory system reasonably designed to preserve records related to the influencers’ communications as required by Exchange Act Section 17(a), Exchange Act Rule 17a-4, and FINRA Rules 2210(b)(4) and 4511.

In March 2023, the firm revised its supervisory system to require a registered principal of the firm to review and approve influencers’ social media content promoting the firm prior to use. At that time, the firm also implemented a system to preserve records of its review and approval of influencer communications promoting the firm.

By failing to establish, maintain, and enforce a system, including WSPs, reasonably designed to supervise its obligations with respect to its influencer’s retail communications, Avenue Securities violated FINRA Rules 3110 and 2010.

In addition to the $300,000 fine, the firm has agreed to a censure and an undertaking that a member of the firm’s senior management who is a registered principal of the firm will certify in writing that

the firm has remediated the issues and implemented a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with FINRA Rule 2210.

Avenue Securities LLC, which became a FINRA member in November 2018, provides self-directed trading through its online portal, primarily to retail customers who are Brazilian residents looking to invest in U.S. securities. The firm, which does not permit U.S. residents to open new accounts, is headquartered in Miami, Florida, and has approximately 40 registered representatives and one branch office.