You have been hired as a regulatory analyst fora fintech start-up that has developed a new stock-trading app,Stockz, which is designed to appeal to Gen-Z.The engineers have designed the app to be fun to use and as addictive as a video game.Stockz's users do not pay for the service.The app's revenue comes from high frequency trading firms who pay for the ability to executeStockz's users' orders.

After a few months, Stockz finds itself struggling to generate the revenue necessary to continue operations. A fund manager approachesStockz and offers to pay a commission each time a user purchases a particular stock that will benefit his fund. The founders are considering promoting these stocks to increase their revenue. Your second assignment is to assessthe regulatory risks of promoting particular stocks, identify the applicable laws or regulations, apply the laws to the facts, and determine whether this practice could be problematic. If so, what steps should be taken to mitigate the risks?

Identify Facts:

Rule(s):

Application:

Conclusion: