ASIC recently bankrupted Tyson Scholz, an Australian ‘finfluencer’ known for promoting trading courses and stock tips under the moniker ‘ASX Wolf’ to his 118,000+ social media followers. He was found to have operated a financial services business from March 2020 to November 2021 without holding an Australian Financial Services License (AFSL).
The series of legal challenges initiated by the corporate regulator against Scholz in 2021, culminated with the Federal Court issuing sequestration orders against him for failing to cover court costs of $456,293.
The Federal Court had previously imposed permanent injunctions on Scholz in April 2023, barring him from conducting any financial services business in Australia and mandating him to pay the legal costs incurred. Scholz’s inability to fulfill this financial obligation led ASIC to take further legal steps, including serving a Bankruptcy Notice in July, followed by a Creditors Petition, resulting in the recent sequestration orders.
Scholz’s business model involved charging subscribers for membership fees ranging from $500 to $1,500, providing them with various levels of trading courses, stock tips, and access to a private chat site via Discord. Despite describing himself as a global equity trader with over a decade of experience, Scholz’s operations without an AFSL have now led to legal and financial repercussions.
ASIC issued many public statements advising firms to be cautious when engaging so-called “finfluencers” and conduct serious due diligence on any prospective partners. It says those promoters must be licensed to give financial advice or are authorised representatives of advisers. The same rules apply to influencers who earn affiliate commissions for referring their pages’ followers to online brokers, which also requires a license to give such advice.
An industry survey revealed that 33% of 18 to 21-year-olds use social media sites to get financial advice from influencers. In comparison, only three percent of people under the age of 25 have used paid financial advice to keep them in the green. Other findings also showed that two thirds of people in the same age bracket changed their financial behavior because of a celeb.
TikTok and other social media influencers, however, do not have the necessary accreditation or qualifications to offer these services, though they promise very lucrative and sometimes guaranteed returns. They also need to meet certain educational standards and manage conflicts of interest, amongst other requirements.
