In today’s ever-changing technological environment, overseeing new forms of communication has become an increasingly challenging task. To assist broker-dealers with meeting regulatory demands, FINRA has released a series of Regulatory Notices focused on communications with the public through social media sites and the use of personal devices for business communications.  Most recently, FINRA published Regulatory Notice 17-18  which outlines guidance regarding use of social networking websites and business communications. 

The notice states that any business communications sent or received through social media must be in accordance with the same recordkeeping requirements as all other communications with the public. Specifically, member firms are to save records of these communications for three years or more, the first two in a readily accessible place. This includes the necessity to save all business communications sent or received electronically, including texts, chats, and instant messaging apps. FINRA’s notice also reminds broker-dealers of the importance of training employees regarding the difference between business and non-business communications.

FINRA reiterates in the Regulatory Notice that an associated person may post content made available by his/her firm as long as the content does not pertain to the firm’s products or services, and would therefore not be subject to Rule 2210 requirements (for example, if the associated person posts information about the firm’s sponsorship of a charitable event, a human interest article or an employment opportunity).  In addition, FINRA reminds member firms that third-party posts by customers or others on websites or social media sites established by a firm or its personnel do not constitute communications with the public under Rule 2210; therefore, the pre-use principal approval, content and filing requirements of the rule do not apply to these posts. However, FINRA warns firms that these communications may be subject to the rule if, for instance, the firm helped prepare a post, endorsed a post, or paid for a post.

FINRA also requires that the following two factors be considered to determine whether the firm or its associates have “adopted the content” of a linked third party website:

  • “Is the link “ongoing” where investors have access to the site whether there are favorable or unfavorable comments about the firm? (If it is considered ongoing, the firm generally has not adopted the message.)
  • Does the firm have influence or control over the content? (If yes, then the link is considered adopted.)”

With regards to “native advertising” (content that bears a similarity to the news, feature articles, product reviews, entertainment or other material that surrounds it online), FINRA notes that firms are permitted to use this type of advertising as long as it is in compliance with the requirements of FINRA Rule 2210, including that communications be fair, balanced and not misleading. Notably, native advertising must prominently disclose the firm’s name, accurately reflect any relationship between the firm and any other entity or individual who is also named, and reflect whether mentioned products or services are offered by the firm.

The “Questions and Answers” section of FINRA Regulatory Notice 17-18 offers further guidance.