FINRA Requests Comment on Rules Governing Communications with the Public

FINRA recently published a Regulatory Notice to announce that it is currently soliciting comment on proposed amendments to FINRA Rule 2210 (Communications with the Public). Rule 2210 provides that communications may not predict or project performance, imply that past performance will recur or make any exaggerated or unwarranted claim, opinion or forecast.

  The general prohibition against performance projections is largely intended to protect retail investors from performance projections of individual investments, which often prove to be spurious, inaccurate or otherwise misleading. Read More…

Utilization of Social Media in the Securities Industry

In today’s culture, the utilization of social media for business purposes is becoming more and more commonplace and regular.  You look at a Linked-In profile before scheduling someone for an interview.  You follow FINRA and the SEC on Twitter and you review the Facebook page of Michael Bloomberg.  Securities firms and their representatives are taking their business to social media, as well.  However, before doing so, there are some important ramifications and requirements to consider. Read More…

FINRA Rule 2210: Communications

As should be expected, broker dealers are not free to communicate with the public, including retail and institutional investors, without restrictions.  The regulation of communications with the public minimizes, although it does not eliminate, the chance that the public will be misled by a firm’s advertisements.  FINRA Rule 2210 establishes the standards for the content, approval, recordkeeping, and filing of communications with FINRA. Read More…

FINRA Rule 3110: Supervision

Last month, Stephens Inc. was censured by FINRA and fined $900,000 for failing to properly supervise “flash” emails sent by its research department.  According to FINRA Rule 3110, firms must have supervisory procedures established which include procedures for the review of incoming and outgoing written (including electronic) correspondence and internal communications relating to the member’s investment banking or securities business. The issue began when Stephens Inc.’s research analysts sent flash emails to the sales and trading personnel.  Although the research analysts sent the flash emails internally, the lack of supervision created the risk that material non-public information may have been included in the emails which could lead to misuse by the sales and trading personnel.

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