Hearsay Social last week participated in FINRA’s Advertising Regulation Conference in Washington DC., where we learned from industry and FINRA experts about regulatory updates and clarifications and gained practical guidance on social media compliance issues.
At the panel on “Social Media and Mobile Considerations” (photo at right), the packed audience was eager to hear from Joseph E. Price (VP, Advertising Regulation and Corporate Finance, FINRA), Melissa Callison (VP of Communications Compliance, Charles Schwab), Mitchell Bompey (Managing Director, Morgan Stanley), and Amy Sochard (Director, Advertising Regulation, FINRA)
This year, social media and mobile compliance took center stage as FINRA dedicated two sessions to highlighting the importance of technology in the financial services industry.
Some of the key topics covered by FINRA and industry experts included:
- Supervision – Compliance and marketing departments can coordinate to produce valuable and relevant content in a compliant manner. Melissa Callison, VP of Communications Compliance of Charles Schwab, illustrated that the big “a-ha” moment at her organization came when compliance realized marketing is good at creating content, but not supervision, so compliance worked closely with its marketing business partners to practice producing compliant content. As a result of marketing and compliance’s collaboration, their marketing team has a better understanding of the rules.
- Third-party content – FINRA noted that its advertising rules do not automatically apply if a firm or broker/dealer is linking to third-party content. The rules only apply if such content is “adopted” – embraced or involved in “entanglement.” A standing link to a third-party Web page is not considered “adoption,” but firms should make sure that the third-party content is vetted. Notably, FINRA stated that firms are not responsible for everyday review of the third-party linked static content. Adoption comes from context of the post. By way of an example, if a registered rep states “hey, take a look at this article, I think it is great,” it is then considered adoption of the content.
- Recordkeeping – Amy Sochard of FINRA stated that the core to recordkeeping is making sure that everyone understands the separation of personal vs. business use.
- FINRA sweep – FINRA stated that the early results of its sweep do not show any major deficiencies or gaps in social media compliance. More will come when they are finished with their analysis.
The FINRA Rules, coupled with the information presented at the conference, indicate that the FINRA staff has a continuing and evolving grasp of the real-time nature of social media. We believe these updates allow organizations to better empower their employees while remaining compliant.