A recent settlement with the Financial Industry Regulatory Authority (FINRA) has resulted in a $50,000 fine for Stockpile Investments, Inc. This action stems from the firm’s distribution of communications related to cryptocurrency assets and services from an unaffiliated entity, which did not align with the content standards outlined in FINRA Rule 2210.
Between July and September 2022, Stockpile Investments utilized various platforms for their communications, including a webpage, email campaigns, and interfaces on their mobile application. These materials did not adequately make it clear that the crypto assets were coming from an entity that was not affiliated with Stockpile Investments, which is a registered broker-dealer and member of FINRA and SIPC.
One notable example was an email sent to prospective clients about the launch of Stockpile’s mobile app. This communication claimed that “Stockpile is the only place where kids can choose from over 30 cryptocurrencies or redeem Stockpile gift cards from both crypto and stock,” without clarifying that these offerings included products from a third-party, non-FINRA registered entity.
Similarly, statements made on the company’s website claiming, “Family and friends can help contribute to your child’s financial future. Stockpile offers gift cards for investing in stocks or crypto,” risked misleading customers about which products were provided by Stockpile and the associated regulations and protections.
Moreover, certain communications fell short in providing a balanced view of the benefits and risks involved in investing in the mentioned crypto assets. As a result, these actions violated multiple FINRA rules, including 2210(d)(1)(A), 2210(d)(1)(B), 2210(d)(3), and 2010.
In addition to the financial penalty, the firm has also accepted a censure. Stockpile Investments has been affiliated with FINRA since 2012 and offers an app-based trading platform tailored for retail customers. The company is based in San Francisco and has a team of eight registered representatives operating from a single office.