Securities firms and brokers have been looking for guidance on how they can use social networking sites. Actually most industries have been trying to figure out what they can and cannot do with these sites. The difference is that the FINRA limitations on communicating with the public make it very difficult to use the sites in compliance with the FINRA rules.
Yesterday, FINRA released Regulatory Notice 10-06
that “clarifies the responsibilities of firms to supervise the use of social networking sites to ensure that recommendations are suitable and their customers are not misled. The Notice also addresses the recordkeeping and other responsibilities of firms.”
The primary goal of FINRA is to protect investors. So this notice does not open the floodgates for using social network sites. They note that they are not even certain that adequate technology currently exists to meet the requirements in the notice. I’m sure vendors will take notice.
“The goal of this Notice is to ensure that—as the use of socialmedia sites increases over time—investors are protected from false or misleading claims and representations, and firms are able to effectively and appropriately supervise their associated persons’ participation in these sites.”
In developing the Regulatory Notice, FINRA worked with its Social Networking Task Force composed of compliance and other representatives of 14 firms.
The notice does not change FINRA policies or their positions. But there are some useful clarifications. If you have used a blog, FaceBook, Twitter, or LinkedIn, the clarifications are fairly obvious. For example, a blog can be an advertisement or an interactive electronic forum. It just depends on whether you allow comments or interactivity.
FINRA has scheduled a webinar to address Regulatory Notice 10-06: Compliance Considerations for Social Networking Sites
Orignally, I heard some hints that there may be some new policies announced as part of FINRA’s March 17 webinar: Implementing Compliance Practices for Social Media. But now that description has been changed to mere address implementation of Regulatory Notice 10-06.
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