FINRA Requirements
By using social networking sites, advisors can get their messages out quickly, measure the effectiveness of their communication efforts, and receive feedback directly from clients.
Because these technologies are new, industry regulations regarding social networking sites are likely to be in flux for some time. In January 2010, FINRA provided guidance on blogs and social networking websites, which they call “electronic forums.” As part of this guidance, FINRA stipulates that social media needs to be captured if it is used by registered representatives to communicate with clients. Based on FINRA’s guidance, compliance departments need to:
- Capture and retain all communications from any public website: Every firm that intends to communicate, or permit its registered representatives to communicate through social media sites must first ensure that it can retain records of those communications.
- Pre-review static content: Static content on social media sites, like profiles, background or wall information, is subject to pre-review, since it is considered advertising.
- Supervise dynamic content: Dynamic content, like status updates and tweets (on Facebook and Twitter), can be subject to post review (triggered either through a lexicon search of keyword violations or through a random sample procedure).
- Supervise customer complaints: Customer complaints must be identified and recorded. In addition, each complaint must be acknowledged by the registered firm to the customer within 15 business days.
Want to learn more?
Download a copy of FINRA’s Regulatory Notice 10-06 on Social Media Web Sites now.
Check out this FINRA podcast on guidance on the use of blogs and social networking sites for business communications.