Ramona Miglāne, Partner at Sorainen, Attorney-at-law
Evija Velvele, Assistant Lawyer at Sorainen
Evija Velvele, Assistant Lawyer at Sorainen
Over the past two years, the interest of private investors in the capital market has increased significantly in Latvia as well – particularly in government and corporate bonds. The era of low deposit interest rates has come to an end – bank deposits are no longer as competitive, and an increasing number of residents are considering investments in bonds. For this purpose, many open a securities account for the first time to participate in specific bond issuances. This trend is further facilitated by finfluencers – financial content creators on social media platforms such as podcasts, Instagram, and YouTube channels - where they explain bond yield calculations, coupon mechanisms, issuance documentation, or the principles of how the capital market operates.
A legally sensitive boundary begins where an educational explanation of the bond market turns into an invitation to purchase a specific bond as the “most suitable” for a particular situation. Investment services regulation (the MiFID II Directive and the Financial Instruments Markets Law) defines investment advice as a personalized recommendation regarding a specific course of action in relation to a particular financial instrument – this constitutes a regulated investment service. A bond is a financial instrument, regardless of whether it is a bank-issued bond, a government bond, or a bond issued by a company in the Baltic region.
Characteristics of Investment Advice
To qualify content as an investment advice, three characteristics are typically required. First, it is addressed to a specific individual rather than to the public – for instance, through private correspondence or within a closed course or training program. Second, the recommendation is presented as suitable for a particular person, based on individual factors such as income, age, risk profile, or family situation. Third, a specific financial instrument and a specific course of action are identified – such as buying, selling, holding, or subscribing to a new issuance. Where an activity largely meets these characteristics, it constitutes a regulated activity that requires an appropriate license.
In practice, this boundary is most often crossed when “rankings” of bonds or other securities, along with personalized recommendations, are published on social media. For example, participant data may be collected during a training course and subsequently used to send a personalized list of recommendations featuring specific issuances, or, in private messages (DMs), a finfluencer – having knowledge of a person’s age, income, and level of savings – identifies the “most suitable” bond. Such situations come very close to what the law considers investment advice, which requires licensing.
Additional Requirements
Capital market regulation cannot be viewed in isolation from the Market Abuse Regulation (MAR). The Baltic stock exchanges are relatively small and illiquid; therefore, even persistent or persuasive calls from a single popular account to purchase a specific issuance on social media can significantly influence market prices. MAR prohibits both the use of inside information and market manipulation, including “pump and dump” schemes, the dissemination of misleading information, and the artificial creation of demand. These rules fully apply to individuals discussing bonds on social media.
Transparency is also essential. If a finfluencer comments on specific securities, they must disclose their interests – whether they hold these instruments themselves, receive remuneration, commissions, or income from affiliate links, or whether the issuance is organized by their cooperation partner. Freedom of the media and the format of an “opinion” do not provide protection where the actual effect is misleading signals to the market or undisclosed interests that affect the audience.
In recent years, Baltic regulators have become increasingly active in engaging in dialogue with opinion leaders and market participants. Bank of Latvia, the Estonian Financial Supervision Authority, and the Bank of Lithuania not only issue warnings about breaches, but also explain how regulatory rules apply in the digital environment. For smaller market players, obtaining a European licence remains quite costly; therefore, the boundary between education and advice must be observed with particular care. Otherwise, the risk is not only regulatory sanctions, but also reputational damage in a sector where trust is the primary currency.
From a consumer protection perspective, content creators are considered performers of commercial practices. This entails an obligation not to mislead, not to promise unrealistic returns or “guaranteed” profits, and to clearly label advertising. Such labelling must be immediately visible and not hidden at the end of a “story” or a post. As interest in bonds grows, it is precisely the clarity of advertising disclosures and risk transparency that determines whether viewers understand that they are being presented with marketing material rather than independent analysis.
What are the key takeaways for financial content creators and capital market participants from all this?
First, public content should remain educational - it may explain mechanisms, terminology, and the structure of prospectuses, but should avoid personalised advice. Second, private communications should not exceed general principles; if a person requests a specific bond “checklist,” it should be stated clearly that personal investment advice cannot be provided without a license. Third, transparency must be ensured by disclosing partnerships, commissions, and securities held in one’s own portfolio. Fourth, before publication, it is advisable to carefully assess any parts of the content that mention specific instruments or include calls to action.
The development of the bond market in Latvia and the Baltic region is good news for the companies, the state, and the investors. However, overall trust is shaped not only by the quality of issuers and the regulatory framework, but also by how these instruments are discussed on social media. By clearly distinguishing financial education from licensable investment advice and consistently adhering to transparency, finfluencers can become allies of the capital market rather than a source of risk.
A legally sensitive boundary begins where an educational explanation of the bond market turns into an invitation to purchase a specific bond as the “most suitable” for a particular situation. Investment services regulation (the MiFID II Directive and the Financial Instruments Markets Law) defines investment advice as a personalized recommendation regarding a specific course of action in relation to a particular financial instrument – this constitutes a regulated investment service. A bond is a financial instrument, regardless of whether it is a bank-issued bond, a government bond, or a bond issued by a company in the Baltic region.
Characteristics of Investment Advice
To qualify content as an investment advice, three characteristics are typically required. First, it is addressed to a specific individual rather than to the public – for instance, through private correspondence or within a closed course or training program. Second, the recommendation is presented as suitable for a particular person, based on individual factors such as income, age, risk profile, or family situation. Third, a specific financial instrument and a specific course of action are identified – such as buying, selling, holding, or subscribing to a new issuance. Where an activity largely meets these characteristics, it constitutes a regulated activity that requires an appropriate license.
In practice, this boundary is most often crossed when “rankings” of bonds or other securities, along with personalized recommendations, are published on social media. For example, participant data may be collected during a training course and subsequently used to send a personalized list of recommendations featuring specific issuances, or, in private messages (DMs), a finfluencer – having knowledge of a person’s age, income, and level of savings – identifies the “most suitable” bond. Such situations come very close to what the law considers investment advice, which requires licensing.
Additional Requirements
Capital market regulation cannot be viewed in isolation from the Market Abuse Regulation (MAR). The Baltic stock exchanges are relatively small and illiquid; therefore, even persistent or persuasive calls from a single popular account to purchase a specific issuance on social media can significantly influence market prices. MAR prohibits both the use of inside information and market manipulation, including “pump and dump” schemes, the dissemination of misleading information, and the artificial creation of demand. These rules fully apply to individuals discussing bonds on social media.
Transparency is also essential. If a finfluencer comments on specific securities, they must disclose their interests – whether they hold these instruments themselves, receive remuneration, commissions, or income from affiliate links, or whether the issuance is organized by their cooperation partner. Freedom of the media and the format of an “opinion” do not provide protection where the actual effect is misleading signals to the market or undisclosed interests that affect the audience.
In recent years, Baltic regulators have become increasingly active in engaging in dialogue with opinion leaders and market participants. Bank of Latvia, the Estonian Financial Supervision Authority, and the Bank of Lithuania not only issue warnings about breaches, but also explain how regulatory rules apply in the digital environment. For smaller market players, obtaining a European licence remains quite costly; therefore, the boundary between education and advice must be observed with particular care. Otherwise, the risk is not only regulatory sanctions, but also reputational damage in a sector where trust is the primary currency.
From a consumer protection perspective, content creators are considered performers of commercial practices. This entails an obligation not to mislead, not to promise unrealistic returns or “guaranteed” profits, and to clearly label advertising. Such labelling must be immediately visible and not hidden at the end of a “story” or a post. As interest in bonds grows, it is precisely the clarity of advertising disclosures and risk transparency that determines whether viewers understand that they are being presented with marketing material rather than independent analysis.
What are the key takeaways for financial content creators and capital market participants from all this?
First, public content should remain educational - it may explain mechanisms, terminology, and the structure of prospectuses, but should avoid personalised advice. Second, private communications should not exceed general principles; if a person requests a specific bond “checklist,” it should be stated clearly that personal investment advice cannot be provided without a license. Third, transparency must be ensured by disclosing partnerships, commissions, and securities held in one’s own portfolio. Fourth, before publication, it is advisable to carefully assess any parts of the content that mention specific instruments or include calls to action.
The development of the bond market in Latvia and the Baltic region is good news for the companies, the state, and the investors. However, overall trust is shaped not only by the quality of issuers and the regulatory framework, but also by how these instruments are discussed on social media. By clearly distinguishing financial education from licensable investment advice and consistently adhering to transparency, finfluencers can become allies of the capital market rather than a source of risk.
