Social media's an effective and popular way for financial services companies to advertise their products and services to investors, but it can also be an easy way to run afoul of SEC regulations.

This week the SEC announced that Wappingers Falls, N.Y.-based money management firm Navigator Money Management and its president, Mark Grimaldi, agreed to be censured and pay a $100,000 fine for making false claims on Twitter and through websites and emails to potential investors.

Companies both within and outside the financial services and investment management sector are still sorting out exactly how and what they can share with the public via social media after the SEC in April conditionally approved the use of Twitter, Facebook and other sites to share announcements.

In this case, the SEC claims there was no ambiguity.

Along with making "misleading statements" on Twitter, the SEC found that Grimaldi and NMM claimed responsibility for model portfolios in his newsletters that "doubled the S&P 500 the last 10 years." Investigators say Grimaldi took credit for that accomplishment even though had no involvement in the model portfolio performance for the first three years.

Also, NMM advertised itself as a "five-star (Morningstar) money manager in newsletters, emails and on websites despite the fact that Morningstar rates mutual funds and not investment advisers. Moreover, since February 2009, NMM didn't even manage any mutual fund with a five-star rating.

Navigator Money Management and Grimaldi were not immediately available to comment on the settlement.

"The securities laws require investment advisers to be honest and fully forthcoming in their advertising to give investors the full picture," Sanjay Wadhwa, senior associate director for enforcement in the SEC’s New York Regional Office, said in a statement. "Grimaldi and his firm are being held accountable for using social media and widely disseminated newsletters to cherry-pick information and make misleading claims about their success in an effort to attract more business."

The SEC order found that NMM violated Sections 17(a) of the Securities Act of 1933, Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rules 206(4)-1(a)(2), 206(4)-1(a)(5), 206(4)-7, and 206(4)-8 as well as Section 34(b) of the Investment Company Act of 1940. It also determined that Grimaldi violated many of the same provisions and aided, abetted and caused NMM’s violations.

Under terms of the settlement, NMM and Grimaldi did not admit to nor deny the SEC findings, but the company will retain an independent compliance consultant for three years and is required to cease and desist from future violations of these sections of the securities laws.