The GameStop case was a before and after in the investment world. A horde of investors grouped around a forum managed to twist the so-called strong hands –hedge funds and other large investors – with a vertical rise in the company selling video games through a network of stores. And the EU has taken note. The coordinator of the European securities commissions, ESMA, has published instructions this Thursday to be able to participate in forums and other social networks, such as Twitter, Facebook or Linkedin, without fear that the supervisor on duty – the CNMV, in Spain – will take retaliation.
It is a serious issue that the CNMV has addressed on numerous occasions. Rodrigo Buenaventura, in an appearance on October 6, already warned that rules are necessary to bring order to the noise of the internet. He gave a very clear example: “I have seen several times in my life a person who recommended buying something just because he had bought it previously and, when all the followers bought and the price went up, he secretly sold his shares before the others and he made a profit at their expense. And of course, every time we’ve seen that, that person was fined and sanctioned, as this is a violation of market rules. “
ESMA has picked up the gauntlet and published the “rules that apply in situations where someone, established within or outside the EU, disseminates information in which they propose an investment decision on EU financial instruments (for example, shares or bonds), aimed at a wide audience “. If they are not met, that person is at risk of market abuse, usually in his version of price manipulation. The other is the use of inside information.
Thus, the agency has designed a kind of advertisement entitled Do you use social media to talk about investments and operations? It then launches the notice to surfers: “Sharing and contributing to discussions, online or offline, may be considered an investment recommendation under European Union law. Specific rules apply when providing such advice.”
The European coordinator of supervisors has also produced a kind of chart in which he gives instructions on how to formulate investment recommendations on social platforms. Actually, ESMA presents it almost like a form, which must contain the following information: the identity of the person; the description of its sources, distinguishing facts, interpretations and price objectives; the date and time, and any conflicts of interest. If it is customary for the person to make these recommendations, they must also summarize the methodology used, the planned updates, the previous recommendations …