The Financial Industry Regulatory Authority (“FINRA”) issued a regulatory notice that addresses the use of digital communications and social media by FINRA member firms. FINRA recognized the expansion of social media and digital communication by broker-dealers, which prompted this guidance, updating the 2011 guidance. The new regulatory notice focuses on text messaging, personal versus business communications, third-party content, hyperlinks, native advertising, testimonials, endorsements, and links to BrokerCheck.
The updated guidance addresses the recordkeeping requirements in Rule 17a-4, which ensures certain communications are preserved. FINRA reminds firms that sharing or linking to specific content, such as a video or article, is a communication by the firm subject to Rule 2210 filing and content requirements. FINRA also clarifies that linking to or sharing an independent third-party website may be subject to Rule 2210 requirements, depending on whether the hyperlink is “ongoing” and whether the firm has influence over the content.
FINRA member broker-dealers may use native advertising, but it must comply with Rule 2210. This means that the advertising must be balanced, fair, and not misleading. Additionally, if a firm arranges for an individual to make a comment or post that promotes the firm, its products, or its services, the communication must comply with Rule 2210 and the firm must identify the communication as an advertisement. Similarly, FINRA reiterated that posts by customers or other third parties on the firm’s website or social media sites are not communications with the public and are not subject to the Rule 2210 requirements. However, if the firm or one of its registered representatives “likes” or shares any of the comments the customers or third parties post, the content becomes subject to the communication requirements of Rule 2210.
In light of these guidelines, FINRA members are advised to review their digital communication policy to ensure compliance with the recently issued regulatory notices.
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