Views on improving the integrity of global capital markets
20 December 2018

Ethics in Practice: Social Media Promotion. Case and Analysis–Week of 17 December

CFA Institute Ethical Decision-Making Framework

How did you do evaluating this week’s (17 December) case? Check out the analysis below. Note that this is the last case for 2018. We look forward to bringing you more cases in 2019. Happy New Year to all.


Lloyd Juniper is a globally famous professional boxer living in Las Vegas, Nevada, with approximately 21 million Instagram followers, 7.8 million Twitter followers, and 13.4 million Facebook followers. Juniper promotes on his social media accounts an initial coin offering (ICO) from Sentara Technologies (Sentara) promoting its STAR cryptocurrency tokens on the Ethereum blockchain. The purpose of the ICO is to raise capital to enable Sentara to complete and operate what it termed the “world’s first Multi-Blockchain Debit Card and Smart and Insured Wallet,” a financial system that would, purportedly, allow holders of various hard-to-spend “cryptocurrencies” to easily convert their assets into legal tender, and spend these “cryptocurrencies” in “real time” using a Visa- or MasterCard-backed “Sentara Card.”

Juniper posted on his Instagram and Facebook accounts a picture of himself holding a Sentara Card at a shoe store with the caption: “Spending bitcoins, Ethereum, and other types of cryptocurrency in Beverly Hills with my Titanium Sentara Card. Join Sentara’s ICO next month!” In addition, Juniper recorded a video at a department store in Los Angeles, which purported to show him using the so-called “Sentara Wallet” application on an iPhone and a “Sentara Card” to buy several items at the checkout counter. Sentara subsequently posted the video to YouTube under the headline “Lloyd Juniper Spending Bitcoin with Sentara Card & Sentara Wallet.” Although Sentara paid Juniper $100,000 for this promotion, Juniper did not disclose any information about the payment in his posts. Juniper’s actions are

  1. appropriate as a product endorsement typically made by well-known celebrities.
  2. appropriate because Juniper’s social media followers are savvy enough to understand that Juniper is being compensated for the posts.
  3. inappropriate unless Juniper discloses the payment.
  4. inappropriate if the ICO is unsuitable for Juniper’s social media followers.
  5. none of the above.


This case relates to conflicts of interest and disclosure of referral fees. CFA Institute Standard VI(C): Disclosure of Conflicts – Referral Fees requires CFA Institute members to disclose any compensation, consideration, or benefit received from others for the recommendation of products and services. As a professional boxer, it is unlikely that Juniper is a CFA® charterholder subject to the CFA Institute Standards of Professional Conduct. Neither could Juniper arguably be seen as an investment professional (nor his social media followers as investment “clients”) subject to the general ethical principles or suitability requirements applicable to investment advisers.

But although celebrities often capitalize on their fame by making product endorsements, the STAR tokens, as investment contracts, are regulated by the US SEC pursuant to the US Securities Act. Section 17(b) of the US Securities Act makes it unlawful for any person to “publish, give publicity to . . . (or) circulate any communication which, though not purporting to offer a security for sale, describes such security” in return for payment from an issuer, underwriter, or dealer, “without fully disclosing the receipt . . . of such (payment) and the amount thereof.” This provision of US securities law is applicable regardless of the sophistication of the audience for the communication and has the same effect as Standard VI(C) in that it requires disclosure of payments for touting the security. Therefore, Juniper’s actions are inappropriate and a violation of US securities laws because he failed to make the proper disclosure. (If Juniper was a charterholder, his actions would have violated Standard VI(C) as well). Answer C is the best choice.

This case is based on a US SEC Enforcement Action on 29 November 2018.

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More About the Ethics in Practice Series

Just as you need to practice to become proficient at playing a musical instrument, public speaking, or playing a sport, practicing assessing and analyzing situations and making ethical decisions develops your ethical decision-making skills. The Ethics in Practice series gives you an opportunity to “exercise” your ethical decision-making skills. Each week, we post a short vignette, drawn from real-world circumstances, regulatory cases, and CFA Institute Professional Conduct investigations, along with possible responses/actions. We then encourage you to assess the case using the CFA Institute Ethical Decision-Making Framework and through the lens of the CFA Institute Code of Ethics and Standards of Professional Conduct. Then join the conversation and let us know which of the choices you believe is the right one and explain why. Later in the week, we will post an analysis of the case and you can see how your response compares.

Image Credit: ©CFA Institute

About the Author(s)
Jon Stokes

Jon Stokes is the Director of Ethics and Standards Education at CFA Institute. His responsibilities include design and creation of on-line ethics education, development and maintenance of the CFA Institute Code of Ethics and Standards of Professional Conduct, and the design and management of the CFA Institute Ethical Decision-Making and Giving Voice to Values education programs. Stokes holds a JD degree.

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