Call Now For a Free Consultation:
(614) 532-4576
Nationwide Representation

FINRA Issues Compliance Guidelines Regarding Use of Blogs and Social Networking Websites

The Financial Industry Regulatory Authority (FINRA) recently issued Regulatory Notice 10-06 regarding the use of blogs and social networking websites such as Facebook, Twitter, and LinkedIn by brokers to communicate with the public. The Notice makes clear that the use of such “Web 2.0” tools is subject to applicable federal securities laws and self-regulatory organization (SRO) rules, including the supervision, suitability, and record retention rules. The stated goal of the Notice is to ensure that investors are protected from false or misleading claims and representations made by associated persons (i.e., brokers), and to ensure that firms are effectively and appropriately supervising their associated persons’ participation in these sites. At the outset, the Notice makes clear that it is only aimed at the use by a firm or its personnel of social media sites for business purposes; the Notice does not apply to purely personal use.One of the major issues addressed by the Notice is communications which can be regarded as “recommendations.” If a broker recommends a specific investment or product to a client, the broker and firm must ensure that the recommendation is suitable for the client. Any mass or publicly available communication which could be regarded as a recommendation raises a problem in terms of suitability. It is extremely difficult to ensure that it is suitable for each and every client who might view the recommendation.With the increasing use of social media websites for business communications, compliance issues related to their use will surely become more important. Record retention is likely to be a major compliance problem. FINRA acknowledges that adequate technology to keep records of communications made through social media sites may not even exist. FINRA has provided regulatory guidance on web communications before; in 2007, FINRA issued Regulatory Notice 07-59 aimed at electronic communications (emails and text messages) and FINRA has also published a “Guide to the Internet for Registered Representatives.” This latest Notice recognizes the continuing evolution in social media in an increasingly connected world. With each advance in technology, new compliance concerns will crop up, requiring further guidance from FINRA.

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

Share This Story
If you found the information provided by this article useful, consider sharing to your social media channels to help others in their search for reliable resources.
Consult with Our Legal Team
There is never a cost associated with a consultation
Atlanta Office

945 East Paces Ferry Road, Suite 2275
Atlanta, GA 30326
Columbus Office

305 W. Nationwide Blvd
Columbus, OH 43215
Meyer Wilson
New Orleans Office

900 Camp Street 
Suite 337
New Orleans, LA 70130
Los Angeles Office

2029 Century Park East,
Suite 400N
Los Angeles, CA 90067
Cleveland Office

4781 Richmond Rd.
Suite 400
Warrensville Heights, OH 44128
Bloomfield Hills Office

41000 Woodward Ave.,
Suite 350
Bloomfield Hills, MI 48304
Quick Links
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this site, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. Read More
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter.
Read More
chevron-down linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram