The Financial Industry Regulatory Authority on Thursday provided guidance to brokerage firms about social media and the use of personal devices for business communications, and by early Friday the news had the finance world buzzing about how FINRA’s new rules will affect the brokerage industry.
Regulatory Notice 11-39, Social Media Websites and the Use of Personal Devices for Business Communications, is FINRA’s attempt to clarify how firms can use social media. The regs take into account the interactive nature of social media. Specifically, they differentiate between “unscripted” interactions between users on social media sites and “static” posting.
With these new regs, FINRA has recognized how important social media and personal devices such as smartphones have become to the financial industry. And the new regs will help reassure companies that have feared entering the unfettered world of Twitter and Facebook by providing them some guidance about what is and isn’t OK to do when engaging with the world on those sites.
The new regs lays out in eight pages guidance on key topics such as communications with the public, personal electronic devices, recordkeeping, social networking websites and supervision.
Significantly, the new regs put the onus on companies to develop their own policies and procedures for social media use. For example, FINRA says that in terms of supervision: “A firm must conduct appropriate training and education concerning its policies, including those relating to social media. Firms must follow up on ‘red flags’ that may indicate that an associated person is not complying with firm policies.”
To be sure, firms have for some time been grappling with the issue of how to use social media and smartphones in their business practices.
“In this most recent release, it’s FINRA acknowledging what has already happened. These are such profound consumer technologies—tablets and iPhones and things—that everybody has them already,” said Stacey Haefele, chief executive of HNW Inc., a New York-based marketing firm with expertise in social media that caters to large financial services institutions. “Firms have been working hard to determine how they’re going to support these platforms in their personal devices.”
Further, Haefele said, FINRA’s new regs are big news because they relax the notion of firms’ having to review every single word that gets published on Facebook or Twitter or other social media sites.