Business news: B.C. companies fined over social media posts

A consultant, miner and CBD distributor have been fined in BC for failing to disclose when they paid for promotional content on social media, including posts shared by influencers.

The BC Securities Commission on Tuesday released details of three similar settlement agreements.

In each case, a company called Stock Social was hired to conduct “investor relations activities,” including creating advertorials and social media posts. In cases where this type of content is created and distributed on behalf of a company, the Financial Markets Authority requires a public company to “disclose that fact in a clear and conspicuously manner,” the BCSC notes in each announcement of the settlements.

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In the first case, Chad McMillan, a consultant hired by a virtual reality company called ImagineAR Inc., was fined $10,000. The content he commissioned the marketing firm to produce included an advertorial “written in the style of a news article, designed to look and read like objective journalistic content,” as well as posts written by six influencers in shared between 2017 and 2018.

In the second case, John-David Alexander Belfontaine, the CEO of a CBD edibles and beverage retailer called Phivida Holdings Inc, was fined $10,000 for similar activities. In this case, the BCSC found that Belfontaine personally reviewed advertorials and Facebook posts, but “did not fix the deficiencies” by directing the marketing company to add the necessary disclaimer.

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In the third case, a fine of $35,000 was imposed. In 2017, MGX Minerals Inc. and CEO Jared Michael Lazerson hired the marketing company to create six advertorials and hire 17 influencers to promote the content on Twitter, Facebook and LinkedIn.

“The advertorials were written to look and read like objective journalistic content. Some of them unobtrusively led readers to a disclaimer on another website,” the settlement agreement reads.

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“Others indicated that a fee was paid but did not specify who was paid for the content or who was paid. Some credited MGX as the source, but stated that the author was a third party and that the content did not reflect the company’s opinion.”

The company was fined $25,000 and Lazerson was fined $10,000.

In all cases, those involved admitted to the wrongdoing and avoided a hearing.

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