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Social media compliance updates from FINRA’s Advertising Regulation Conference

As announced last June, new FINRA Communication Rules, including FINRA Rule 2210 (Communications with the Public), have been approved by the SEC and will take effect February 4, 2013.  These rules, and related regulatory notices, provide important guidance for firms on blogs and social networking websites.
At the most recent FINRA Advertising Regulation Conference in Washington DC, Hearsay Social heard FINRA and industry experts provide useful updates and clarifications on Rule 2210 and social media compliance.
Some of the key topics covered include:

  • Pre-review requirements: Does a registered representative’s first social media post or their first interaction in a new conversation need to be pre-reviewed by their firm?
  • Deleting third-party comments: If a firm deletes third-party comments from its social media site, does that imply that it is has endorsed the remaining comments?
  • Third-party content: What are a firm’s obligations when a registered representative tweets a link from a business social media site to an article on an independent, third-party website?

Pre-review requirements

Across the financial services industry there has been an open question about whether dynamic content needs to be pre-reviewed. Reaffirming Notice 2210 at the conference, FINRA said there is no requirement for the pre-review of social media interactions.
The SEC-approved “Communications Rules” lay out an exception to the preapproval requirement for social media: firms and reps will not need to have a principal approve the content of a status update, post, or tweet prior to it being posted on an online interactive forum such as a LinkedIn group, Twitter feed, or Facebook page. Additionally, tweets and posts are not considered static content under 11-39 and therefore need not be approved.
Hearsay Social has and will continue to offer pre-review solutions for organizations seeking an extra level of security and as always the supervision and retention/retrieval of all social media communications are standard.

Deleting third-party comments

At the conference, FINRA representatives said that deleting a third-party post from a firm’s sponsored social media pages does not mean that the firm is endorsing the remaining comments. Firms are responsible for the supervision and retention of all comments, including deleted comments, but it is up to their good judgment in deciding which comments need to be removed.
It was also mentioned, however, that firms only deleting negative comments (and leaving all positive comments) could face repercussions. For this reason, comment deletion should be an action reserved for very specific scenarios in which the firm finds posts to be illegal, unprofessional, or inappropriate. The ability to delete concerning content is important for protecting a firm’s brand and to aid in this effort.
Hearsay Social offers real-time remediation functionality, automatically removing content that contains a specific keywords or phrases and maintaining a record of any deleted conversations after removing them from the public site.

Third-party content

In the case of a representative publishing a link to a third-party article, FINRA advises that the rep’s organization is responsible for the content in that article.  The organization is not responsible for the entirety of the content available on that site hosting the article, but it should be aware of what the specific article contains.
Hearsay Social offers a number of workflow and approval solutions that allow organizations to review articles and other content prior to being published by representatives of the organization.
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 on social media while remaining compliant.

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.