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Ensuring Compliance in 2014: Lessons learned from AXA and FINRA in a Hearsay Social webinar

Last week we were excited to present our first webinar of the year, Ensuring Social Media Compliance in 2014. Thank you to everyone who was able to attend and especially our speakers, Windy Lawrence (Chief Compliance Officer, Lead Director and Associate General Counsel at AXA Distributors, LLC and Head of Advertising Compliance for AXA Advisors LLC), Amy Sochard (Senior Director of FINRA’s Advertising Regulations Department), and Yasmin Zarabi (Hearsay Social’s Vice President of Legal and Compliance).
Many of you asked if we could outline the topics we discussed during the event. Here are some of the points we covered:

Tips for creating and managing your social media policy

  • Carefully draft a clear, concise and comprehensive social media policy that considers the unique requirements of your firm. (For more information, see our white paper on How to Create Your Social Media Plan and Policy.)
  • Get input from business units across your organization on the policy as early in the process as possible.
  • Consider implementing a social media program with part of your organization before rolling it out company-wide.
  • Provide training to anyone in your organization who will be using social media on behalf of your firm.
  • Ensure users understand the policy and how it will be enforced by training as described above, and by requiring them to sign attestations agreeing to comply to the policy.
  • Review and update your policy at least once a year. Have users re-sign the attestation annually.

Get to know FINRA Rule 2210 (Communications with the Public)

  • FINRA Rule 2210 sets revised standards regarding broker-dealer communications with the public.
  • The rule defines categories of communication that are relevant to social media as outlined below.

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Supervising social media

  • A registered principal must review social media sites that will be used for business prior to their usage. Such sites must be reviewed online, in their true form.
  • Only approve users that you believe can and will abide by your firm’s social media policy.
  • Supervise content regularly to make sure users aren’t violating the rules and policies. Conduct spot checks as needed.
  • Consider defining categories of supervision based on different roles, applicable state laws, social network features and different use-cases (e.g. using a network for research versus communication.)

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Update on 2013 FINRA Spot Checks

  • FINRA began doing spot checks of registered member firms’ social media usage during the summer of 2013.
  • Spot checks examined how firms and specifically their top producing registered representatives were using social media for business.
  • Initial findings were positive: most firms produced reports that were in compliance with FINRA rules.
  • The issues that FINRA identified were mostly around record-keeping and supervision processes that didn’t comply with requirements.
  • For more information, see the spot check guidance page on FINRA’s website.

Consider Mobile as Part of Social for 2014

  • 71% of people use mobile devices to access social media.
  • Consider mobile when drafting or updating your overall social media policy and strategy.
  • Regulations require firms to monitor and archive social media communications no matter how they are made.
  • Make sure your compliance system is able to capture all communications on social regardless of whether they made at home, from the office or through mobile devices.

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Thanks again to the speakers and attendees of this webinar. Understanding and navigating the complex regulations can be challenging and time-consuming, and we were lucky to have perspectives from Amy and Windy to help us better understand the regulatory requirements.

Disclaimer: The material available on this blog is for informational purposes only and not for the purpose of providing legal advice. We make no guarantees on the accuracy of the information provided herein.

Social media compliance updates from FINRA’s Advertising Regulation Conference

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.