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Practice Management > Marketing and Communications > Social Media

Using Social Media: FINRA's New Compliance Guidelines

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As more agents join social networking sites such as LinkedIn, Twitter, and Facebook, there have been some questions as to where social media interactions fall in terms of compliance and regulation. Since there was no precedent for it, many agents were not concerned about the things they said and did online. Others wondered if they should run every communication by their compliance department.

In order to help agents navigate the murky waters of social media compliance, FINRA has issued Regulatory Notice 10-06, which provides guidance on blogs and social media sites. Although the guidance was issued specifically for those involved in securities sales, even those who don’t sell securities would be wise to consider implementing these strategies.

  • Every firm must retain records of communications related to the broker-dealer’s business that are made through social media sites.
  • If you or your firm recommends a security through a social media site, this triggers the requirements of NASD Rule 2310 regarding suitability. Although this does not affect insurance products at this time, keep in mind that with Rule 151A on the table, fixed indexed annuities could soon be included in this guideline.
  • As a best practice, firms should consider prohibiting all interactive electronic communications that recommend a specific investment product unless a registered principal has approved the content. Alternatively, many firms maintain databases of approved communications and provide their personnel with access to these templates.
  • If a post on your blog contains advertisements for a specific product, it must have prior approval. However, if the point of the blog post is to raise awareness of an industry issue or to engage your readers in a discussion, no prior approval is necessary.
  • Social networking sites include both static content (profile, background, and wall information) and active content (status updates). Though static content must be approved by a registered representative before it is posted, real-time communications do not need to be pre-approved. However, firms still must supervise these communications.
  • Each firm must decide its own method for reviewing real-time communications, whether that includes monitoring all communications or simply choosing a random sample.
  • Not everyone in the firm should be allowed to create a social media account. Only those with special training should be considered, and anyone with a history of presenting compliance risks should be prohibited.
  • In general, FINRA does not count third-party postings on social media websites to be attributable to the firm; therefore, such postings aren’t subject to FINRA’s guidelines. However, if a firm is involved in the posting in anyway (for example, they helped to find content), the firm can be held liable. You can include a disclaimer on your site that third-party postings do not necessarily reflect the views of your firm. All firms should monitor third-party posts, and create a plan for dealing with them.

For more in-depth information on dealing with these best practices, check out “Making Sense of FINRA’s Social Media Guidelines.”


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