Marketing and advertising in the mid-20th Century was very different then what exists in today’s world of social media. Marketing and advertising are constantly evolving. Today’s social media influencers, hashtags, comments, likes, and posts can all be used for marketing purposes. With this in mind, it makes sense that regulations should evolve as well and not be stuck in the past. In December 2020, the SEC adapted regulations to better align with the 21st Century’s marketing environment. The 1961 Advertising Rule 206(4)-1 2021 combined with the Cash Solicitation Rule206(4)-3 will now be regulated under a single rule referred to as Read more about What’s ‘New’ about the SEC’s New Marketing Rule for Investment Advisers?[…]
When a registered investment adviser on boards a new registered person, there are a couple of new hire forms the firm needs to collect to be compliant with applicable securities laws and regulations.
To evidence completion of new hire forms by all associated persons, firms should adopt and implement written policies and procedures reasonably designed to prevent violations. Implementation of procedures will often rely on the use of forms and other documents designed to gather or report important data. While the completion of some forms is required by law or regulation, the implementation of other forms reflects principles of good management and controls. Regulators view the adequacy of procedures and the proper completion of forms as indicators of a culture of compliance within the firm. Consequently, firms should periodically verify the adequacy of their policies, procedures, and controls related to new hire forms.
Firms will use a wide range of customized forms and attestations to help them achieve compliance with applicable securities laws and regulations. Firms should periodically assess how it can enhance its compliance program and better supervise employees through the use of new or improved forms, reports, acknowledgments, or attestations.
Associated person disclosures and attestations are not a “one size fits all” list of documents. The purpose of disclosures and attestations is to educate your employees on the expectations of the firm based on firm procedure and regulatory mandates. Another important purpose is to give representatives a chance to know relevant updates and changes that may require pre-approval and/or added compliance responsibilities.
As firms continue executing work from home policies, they should consider crucial factors related to potential challenges and changes needed to their communications surveillance program. As more employees are working on personal devices, spending more time on social media, and conducting business in this new reality, regulations on building a compliant communications program are even more important now.
In the recent “2019 Report on FINRA Examination Findings and Observations,” one of the topics highlighted was the use of digital communications. This can include a wide range of social media, email, text messaging, and various other digital tools. The regulatory requirements pertaining to the usage of digital communications are outlined in Exchange Act Rule 17a-3 and 17a-4 and FINRA Rules 3110(b)(4) and 4510. These rules require procedures pertaining to the usage of these types of communications, as well as the appropriate maintenance of the communications in the form of books and records.
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. Read More…