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Social media compliance updates from the 2014 FINRA Advertising Regulation Conference

Earlier this month, Hearsay Social participated in FINRA’s Advertising Regulation Conference in Washington DC, where we heard regulatory updates, rule clarifications, and practical guidance on social media compliance from FINRA and industry experts.

The Hearsay Social team at the 2014 FINRA Advertising Regulation Conference.

Once again, social media compliance took center stage as FINRA dedicated two sessions to highlighting the adoption of social media in the financial services industry and the evolution of social media regulation.

At the panel on “Social Media, Digital Communications and Compliance,” the packed audience was eager to hear from Joseph Price (SVP & Counsel, FINRA Corp Financing & Advertising), Amy Sochard (Sr. Director, FINRA Advertising Regulation), Shayna Beck (Senior Manager, Corporate Communications, Vanguard), and Ted Newton (Assistant VP, Advertising Review, MassMutual).

FINRA AdReg panel
Amy Sochard, Ted Newton, Shayna Beck, & Joe Price talk social media compliance at FINRA’s Advertising Regulation Conference.

Some of the key topics and takeaways included:

Interactive vs. static content

FINRA recognizes that not all communications with customers require pre-approval.  Only content categorized as “static” requires pre-approval, as opposed to “interactive” communications, which should be monitored for compliance. In the session, FINRA addressed some of the confusion around what is defined as interactive content. FINRA explicitly stated that content published in a way that allows for other users to comment on, reuse, or “like” to be considered as interactive content.

Key takeaway: If a social media post allows for an “action” to be taken by another user, then firms only need to monitor such content.

LinkedIn endorsements

LinkedIn endorsements and recommendations can be problematic for Registered Investment Advisors (RIAs) under the “Testimonial Rule” of the Advisors Act. FINRA rules do not prohibit “testimonials” provided that such recommendations/endorsements are presented with the appropriate disclosures, such as “past performance are not indications of future performance.” In the session, Ted Newton of MassMutual stated that they allow for their financial representatives to list their skills on LinkedIn as long as they are pre-approved by a principal.

Key takeaway: RIAs should refrain from listing their skills on LinkedIn and they should not allow recommendations on their profiles. Insurance agents and broker dealers that are not registered under the Investment Advisors Act have more leeway to publish skills and recommendations, provided that their principal has pre-approved the content and that it is published with the appropriate disclosures.


Mobile use of social media is increasingly common, therefore firms should ensure they are addressing this use case. The biggest concern discussed in this session was that the way content is displayed may vary depending on the device. For example, the same social media content viewed on a smartphone might not be truncated or displayed differently in comparison to how it displays through a laptop browser.

Key takeaway: Your social media compliance solution should have a seamless process for ensuring that all social media posts are compliant with FINRA requirements across devices.

FINRA social media sweep

In this session, FINRA shared some results and learnings of the “social media sweep” conducted this past summer. Most firms reviewed were quite conservative in their use of social media but there were still some gaps in supervision and record-keeping. One important learning for firms that did have larger programs and middleware solutions to address compliance was that FINRA had a hard time reviewing and interpreting activity across multiple different data sources.

Key takeaway: Not only do firms need to keep records of social media activity, but records of posts or comments should also be easy to review in the context of the social activity.  

Overall, it’s great to be a part of the continued discussion over social media compliance, but it’s clear that firms still have a lot more opportunity to embrace this channel.

FINRA AdReg poll
Poll conducted in real-time at the 2014 FINRA Advertising Regulation Conference.

Based on a poll of the audience hosted by FINRA at the event, the majority of participants still report the clarity of regulations as the the biggest challenge to firms in adopting social media. Hopefully the clarifications from this session help firms get one step closer to adopting social media.

We have been working with insurance and financial services firms for almost five years, but we’ve still only seen the tip of the iceberg that is the opportunity for financial professionals on social media. More confidence in interpretation of the regulations should help firms move forward.

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.