FINRA Issues Guidance to Firms, Brokers on Communications with Public
Through Social Networking Web Sites
WASHINGTON--(BUSINESS WIRE)--The Financial Industry Regulatory Authority (FINRA) today issued
guidance to securities firms and brokers regarding the use of social
networking Web sites such as Facebook, Twitter, LinkedIn and blogs to
communicate with the public.
?Social networking sites and blogs raise new regulatory challenges,
particularly in the areas of supervision, advertising and books and
records requirements?
The guidance in Regulatory
Notice 10-06, which is presented in Q&A format, clarifies the
responsibilities of firms to supervise the use of social networking
sites to ensure that recommendations are suitable and their customers
are not misled. The Notice also addresses the recordkeeping and
other responsibilities of firms.
?Social networking sites and blogs raise new regulatory challenges,
particularly in the areas of supervision, advertising and books and
records requirements,? said FINRA Chairman and CEO Rick Ketchum. ?Our
goal in issuing this notice is to ensure that firms and brokers use
social networking sites in an appropriate manner.?
The notice emphasizes that each firm must develop its own policies and
procedures ? in the context of its own particular business model and
compliance and supervisory programs ? designed to ensure that the firm
and its personnel are complying with all applicable regulatory
requirements when using social networking sites. Some technology
providers are developing systems that are intended to enable firms to
retain records of communications made through social networking sites.
As the Notice states, however, ?FINRA does not endorse any
particular technology to keep such records, nor are we certain that
adequate technology currently exists.?
Regulatory Notice 10-06 is a response to the expressed need for
guidance explaining how FINRA rules governing communications with the
public, recordkeeping and supervision apply to social networking sites.
FINRA has previously issued guidance on the application of
communications regulations to Internet communications in its Guide
to the Internet for Registered Representatives, as well as in
numerous podcasts.
In developing the Regulatory Notice, the FINRA staff was informed
by its own experience in applying FINRA rules to electronic
communications, by its conversations with experts in social networking
technology, and by the work of a Social Networking Task Force composed
of compliance and other representatives of 14 firms.
FINRA, the Financial Industry Regulatory Authority, is the largest
non-governmental regulator for all securities firms doing business in
the United States. Created in 2007 through the consolidation of NASD and
NYSE Member Regulation, FINRA is dedicated to investor protection and
market integrity through effective and efficient regulation and
complementary compliance and technology-based services. FINRA touches
virtually every aspect of the securities business ? from registering and
educating industry participants to examining securities firms; writing
rules; enforcing those rules and the federal securities laws; informing
and educating the investing public; providing trade reporting and other
industry utilities; and administering the largest dispute resolution
forum for investors and registered firms.
For more information, please visit our Web site at www.finra.org.
Financial Industry Regulatory Authority
Nancy Condon, 202-728-8379
Brendan
Intindola, 646-315-7277
Read more