Industry Implications
The legal challenges facing both Cardone brothers reflect growing regulatory scrutiny of social media investment influencers. Federal agencies have increasingly focused on promoters who use social media platforms to market investment opportunities to unaccredited investors, particularly when those promotions involve bold return projections or downplay risks.
The cases also highlight the challenges facing everyday investors who rely on social media personalities for financial guidance. As the Ninth Circuit noted in its decision, the Cardone funds were specifically marketed to “everyday investors” and “unaccredited investors”—individuals who may lack the financial sophistication to evaluate complex investment risks or scrutinize SEC filings.
The court’s emphasis on protecting unsophisticated investors suggests that regulators and courts may continue to take a hard line against promotional practices that target this vulnerable population. For social media influencers in the financial space, the message is clear: bold promises and flashy marketing tactics will face increasing legal scrutiny.
