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FINRA Spot-Check of Social Media Communications

The Financial Industry Regulatory Authority (FINRA) has sent Targeted Examination Letters to member firms regarding spot checks on their use of social media (see letter below). Financial institutions use social media for purposes such as prospect marketing, customer retention and brand building, but there are strict rules concerning advising and making recommendations for clients on social media sites. Rules are describe in FINRA’s Guide to the Web for Registered Representatives.

With the level of data being requested in these “spot checks” using social media could become too costly to support for financial firms.

June 2013

Re:  Spot-Check of Social Media Communications

FINRA Rule 2210(c)(6) states that each FINRA firm’s written (including electronic) communications are subject to a periodic spot-check procedure. Pursuant to this procedure, the Advertising Regulation Department requests that you provide the following:

    1. An explanation of how the firm is currently using social media (e.g., Facebook, Twitter, LinkedIn, blogs) at the corporate level in the conduct of its business.  Please be specific as to the business purpose of each social media platform as it is used by the firm. 
       
    2. Please provide the following with respect to the firm:An explanation of how the firm’s registered representatives and associated persons generally use social media in the conduct of the firm’s business, including the date(s) the firm began allowing the use of each social media platform and whether such usage continues.
      1. The URL for each of the social media sites used by the firm at the corporate level,
      2. The date the firm began using each of the sites identified above,
      3. The identity of all individuals who post and/or update content of the sites identified above.
    3. The portion of your firm’s written supervisory procedures concerning the production, approval and distribution of social media communications in effect during the time period February 4, 2013 through May 4, 2013.
    4.  An explanation of the measures that your firm has adopted to monitor compliance with the firm’s social media policies (e.g., training meetings, annual certification, technology).

  • A tabular list of your firm’s top 20 producing registered representatives (based on commissioned sales) who used social media for business purposes to interact with retail investors as defined in FINRA Rule 2210(a)(6) during the time period February 4, 2013 through May 4, 2013.  Please identify the type of social media used by each individual for business purposes during this time period.  Please include the individual’s full name and CRD number as well as the dollar amount of sales made and commissions earned during the period.

 

Elizabeth Gooding

Elizabeth Gooding is the editor of the Insight Forums blog and president of Gooding Communications Group www.GoodComm.net

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About Elizabeth Gooding

Elizabeth Gooding is the editor of the Insight Forums blog and president of Gooding Communications Group www.GoodComm.net

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