The Securities Commission Malaysia (SC) is cracking down on finfluencers as investment scams linked to social media personalities continue to rise.
Global warnings on finfluencers
The regulator noted that the problem is not unique to Malaysia. The US Securities and Exchange Commission fined Kim Kardashian US$1.2 million for promoting cryptocurrency without disclosure. Lindsay Lohan also faced penalties for undisclosed endorsements.
The SC stressed that finfluencers, if left unchecked, pose similar risks to Malaysian investors. It is intensifying resources through a three-pronged strategy: engagement, monitoring, and enforcement. This proactive approach aims to tackle a global problem, mirroring actions seen elsewhere.
“We are not against financial influencers,” Yew Yee Tee, Executive Director and General Counsel at the Securities Commission, stated in a BackgroundBriefing, “they have a role in supporting a fair and orderly capital market. But they must be accountable.”
Engagement, monitoring and enforcement
The SC identified and engaged several finfluencers last year to clarify what activities are legal and what cross the line.
It also launched a consultation on guidelines to push for more responsible conduct among finfluencers.
Monitoring has become equally important.
In 2023, the SC fined three self-styled investment gurus a total of RM10 million for breaching securities laws.
Resources and public support
The regulator is building internal capacity by upskilling staff and deploying artificial intelligence to detect misconduct by finfluencers faster.
External resources also play a role.
Public tip-offs through the Adwan channel help the SC identify scams early, while market participants assist in spotting irregularities.
Skepticism and accountability
The SC aims for three outcomes: greater investor skepticism, stronger accountability from finfluencers, and more self-regulation in the market.
Finfluencers, the SC said, can help improve financial literacy.
But without accountability, they risk fuelling fraud instead of trust.
About the speaker:
Yew Yee Tee
Executive Director and General Counsel
Securities Commission Malaysia
Yew Yee Tee is the Executive Director and General Counsel at the Securities Commission. She graduated with an LLB (Hon.) from the University of Malaya and practised as an Advocate and Solicitor of the High Court of Malaya at Messrs. Skrine. Before joining the SC in 2020, she spent approximately 20 years at Bursa Malaysia, where she served in various capacities, including Head, Enforcement and Chief Regulatory Officer, overseeing all regulatory matters. In her current role, she focuses on law reform, rules and regulations, legal and regulatory advisory, and consumer and investor matters.
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5W1H summary
| Category | Description |
| Who | 1. Securities Commission (SC) |
| 2. Market influencers | |
| 3. Public investors | |
| What | 1. Combatting investment scams |
| 2. Regulating influencers’ conduct | |
| 3. Imposing deterrent fines | |
| When | 1. Ongoing SC initiative |
| 2. Recent enforcement actions | |
| 3. No specific timelines mentioned | |
| Where | 1. Malaysian capital market |
| 2. SC’s official website | |
| 3. Not Singapore or Australia | |
| Why | 1. Influencers lead public opinion |
| 2. Rising trend investment scams | |
| 3. Ensure market integrity | |
| How | 1. Engaging with influencers |
| 2. Monitoring their content | |
| 3. Taking enforcement actions |
Frequently Asked Questions
1. What is the role of influencers in combating scams? Influencers play a significant role due to their ability to influence and lead the public in making positions, making them important in combating scams.
2. How does the SC ensure influencers remain credible while promoting responsible behaviour? The SC focuses on pushing outcomes of skepticism, accountability, and self-regulation. Being responsible does not dilute the quality or attractiveness of content, as credibility is key for loyal followers.
3. What were the amounts of the fines imposed on the three influencers? The biggest fine was approximately 6 million, while the others varied depending on the significance and materiality of the breach, the impact, and the benefits derived from illegal activities. The total fine amounts were partly punitive and partly to disgorge illicit gains.
4. What are the Securities Commission’s key focus areas regarding influencers? The SC’s three key focus areas are engagement, monitoring, and enforcement. Engagement involves educating influencers on what can and cannot be said, while monitoring tracks their activities, and enforcement addresses contraventions.
5. What outcome does the SC aim to achieve regarding investors? The SC aims for greater skepticism on the part of investors, encouraging them not to take everything at face value. They should be able to make informed decisions about what is factual versus fiction. This will lead to better-informed investment decisions and hopefully better investments.
6. Are investor education packages offered by trading platforms considered product pushes? It is possible they are product pushes dressed up as education. The SC’s agenda is to equip investors with the necessary know-how to make better-informed investment decisions, regardless of the platform’s intent.
Transcript of the interview:
As you can see, through advancements of technology, particularly social media platforms, we see the rise of financial influencers. We also see escalation in investment scams, unlicensed activities, and a role played by this group of influencers. For example, it is not unique to Malaysia; globally, we have seen latest like US SEC taking action against Kim Kardashian and Lini Lohan for promoting cryptocurrency tokens without adequate disclosure of information. Fines of 1.2 million US, equivalent to almost 5 million ringgit, have been imposed. It is a problem. This is an area the Securities Commission is focusing on, intensifying its resources. We focus on three key focus areas: engagement, monitoring, and enforcement. Let me expand on these three words.
In terms of engagement, it is nothing new. SC has been engaging and providing investor education, but last year we embarked on engaging influencers. We identified key financial influencers, went in to engage them to understand the problem, to update them, and to educate them as to what is possible and what is illegal. Last year, we came out with consultation on guidelines pertaining to influencers.
We embarked on that so hopefully they will be more responsible and accountable. Then we come to monitoring. That is also another key focus area because while we educate and engage, there could still be recalcitrant influencers. This is where we need to ensure we can detect in a timely manner and take appropriate action. When we see contravention of our securities laws, this is where we will take enforcement action. We have done that. For example, in 2023, we actually went against three investor gurus, or self-declared investment gurus, and imposed a total fine of about 10 million ringgit against these three. You notice US SEC, SC, is doing a similar thing.
And obviously you are the regulator, but what else did you have to mobilise internally? What is the backstory?
So obviously, you would probably wonder this takes a lot of resources. How does SC go about doing it? Again, we focus on two areas, internal capacity as well as external capacities. Internal here means working within SC. You know that SC has limited resources, and this is a trend we are seeing. So there is a need to upscale the staff as well as optimise the utilisation of technology such as artificial intelligence.
This enables us to detect and take timely action. This is where we have technology to help to prompt us in terms of detection. Then the second area I talked about was external capacity. This is where we get the public to assist, and that has worked well. We have our Adwan channel where we get public feedback, which can direct us to promptly identify scams and for us to take timely action. This is also where we get assistance in terms of the external capacity, getting our market participants to help as well. That has worked well in terms of how we utilise the resources, both resources, as well as the market and public resources, in helping us combat scams through the influencers.
At the end, three alphabets we are looking at in terms of outcomes we are trying to achieve. Greater skepticism on the part of investors. Skepticism. Accountability, and that is the role that must be played by financial influencers. We are not saying financial influencers are bad. They have a role to play in ensuring a fair and orderly capital market. So that accountability must be there for them to operate and contribute to the public good, in this case, a fair and orderly market. Lastly, we are looking at self-regulation. This is where we will try to get the market to self-regulate, to chip in and contribute in combating scams, and this is through using influencers.