Abstract
The internet and social media have not only changed the way we shop, communicate, and seek information, but has also profoundly transformed the financial industry, reshaping how we seek and receive financial advice. Moving away from traditional advisor-client interactions, younger, digital-savvy generations favor seamless online experiences in every aspect of their lives. The rise of user-friendly trading applications and pandemic-driven online engagement has further accelerated this trend, introducing both opportunities and risks for users and those offering financial advice. The use of social media in promoting investments raises concerns about market manipulation, inadequate investor protections, and the application of outdated legal frameworks to modern communication methods. Two United States Courts of Appeals were recently confronted with the question of whether mass communication via social media can give rise to seller liability under section 12(a)(2) of the Securities Act of 1933. As more courts and regulators grapple with how to apply old securities laws to new modes of communication, the need for clear guidance becomes increasingly urgent. This Note argues that solicitation via social media should trigger seller liability, particularly given its widespread influence on unsophisticated and younger investors. To balance investor protection with the risk of overextending liability, this Note proposes a three-part test focused on the quality and nature of the solicitation, ensuring legal frameworks evolve to meet the challenges of the digital age.
Recommended Citation
Anika Austin,
Social (in)Securities: Should Mass Communication via Social Media Give Rise to Seller Liability Under Section 12(a) of the Securities Act? A Proposal to Reconcile the Emerging Circuit Split After Pino,
90 Brook. L. Rev.
1239
(2025).
Available at:
https://brooklynworks.brooklaw.edu/blr/vol90/iss4/5
