SOCIAL MEDIA – 2015 FINRA Exam Priorities
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SOCIAL MEDIA – 2015 FINRA Exam Priorities

Over the last several years FINRA has included Social Media as one of its exam priorities, Social Media while an invaluable tool, has been a source of frustration to some firms on how to supervise both the social media activity for the firm and its associated personnel.

In 2013, FINRA issued a Sweep letter asking firms about their usage of Social Media, the letter can be found on the FINRA website at

The questions that FINRA asks in this letter are an invaluable reference in establishing or upgrading your firm’s social policies and procedures. As social media continues to expand and becomes a mission critical part of reaching new clients and building your business, it is critical to develop strong policies and procedures related to your firm’s ability to supervise this powerful business tool.

It is interesting to note that while social medial websites such as LinkedIn and Facebook Social Media have been around for over ten year, it wasn’t until widespread use of these sites in 2006 caught FINRA’s attention and not until 2009 when FINRA established a committee to review the use of social media and the potential impact on the financial services community. The result of their review was released to membership as Regulatory Notice 10-06, which has been the guidance that member have used to implement their social media policies and procedures.

The rules in regards to usage of social media apply to firms and personnel using sites for business purposes, (defined by the content of the message, not where the site is accessed, doesn’t matter if you send from office or from home.) From a regulator perspective social media content has been broken in to several categories, and sometimes the lines between categories can get blurry. The two most common categories that firms should be aware of are as follows:

Static Information

Since FINRA started reviewing social media at member firms, it has clearly stated that in the financial services industry, there is no division between a registered representative’s personal and professional use of social media. FINRA also defines LinkedIn profiles as static content that requires pre-approval by a Series 24 representative (usually the firm’s Chief Compliance Officer)

Also any changes that you make to your profile are subject to review, if the language can be deemed to be misleading in any way, you will be required to amend in order to be compliant.

Profile can also incorporate interactive data as well so it is important that you establish a procedure to review your representative’s profiles on a quarterly or semi-annual basis just to make sure that the information has not changed dramatically.

Interactive Information

Interactive content (Tweets, Facebook comments) do not require pre-approval. However, the firm must supervise interactive content in a manner reasonably designed to ensure they do not violate communication rules.

If a communication between the firm and a customer, or a negative comment is posted by the customer, it must be acknowledged and followed up within 15 days.

As a courtesy, Spotlight Compliance Solutions is posting a free Social Media Questionnaire that you can utilize to help you in supervising your personnel. This questionnaire is only a guideline, and Spotlight Compliance Solutions is not responsible for its content, any issues arising from the use is the responsibility of the user.

In addition, here is what you need to be aware of when utilizing Social Media, (apologies to Cecil B. DeMille).

1. Thou shalt retain adopt policies and procedures to supervise use of Social Media by thy representatives.

2. Thou shall apply the suitability rule.

3. Thou shalt retain thine tweets and postings on social media.

4. Thou shalt have a principal approve thine content, profile, and supervise thy tweets and posts.

5. Remember to honor the firm’s policies and procedures, to keep thy comments true and not misleading or you may risk incurring the wrath of thine regulator and forced to endure dishonor and damage to thy reputation along with potential financial hardship.

6. Thou shalt acknowledge that thine blog is an interactive electronic forum subject to the rules of communication.

7. Thou shall train registered representatives to tweet and post to ensure proper usage of social media

8. Thou shall document thy review of social media communications.

9. Thou shalt not covet another’s content nor retweet the content, if thou doest covet, ensure that thy firm has a disclaimer to avoid entanglement by customer or 3rd party content

10. Thou shalt enforce, follow and revise policies procedure to keep abreast of regulatory developments.

While the previous information provides some levity describing your responsibilities as it relates to social media, the January 2010 Notice 10-06 provides questions and answers related to social media supervision and guidelines, FINRA has since released additional Notices related to this topic. It is listed below for your convenience.

Notice 10-06: Social Media Websites: Guidance Blogs

Notice 11-39: Social Media Websites and the use of personal devices for business communications.

If you have any questions or comments regarding this post or need someone to assist you with your social media procedures, feel free to contact , Jack Faller 973-769-6253 or visit the Spotlight Compliance Solutions website at to see how we can work with you to assist you with your compliance challenges.

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