Social Media Pitches Can Create Securities Liability, Court Says

A real estate investment firm and its founder are securities “sellers” potentially subject to liability for making false prospectus statements, the Ninth Circuit said Wednesday in a case over Instagram and YouTube promotions.

Nothing in the Securities Act of 1933 “indicates that mass communications, directed to multiple potential purchasers at once, fall outside the Act’s protections,” the US Court of Appeals for the Ninth Circuit said. In so doing, it joined the Eleventh Circuit which decided the same social media issue in February.

The Ninth Circuit panel partially reinstated a suit by a man who says he invested $10,000 in ...