On March 17, 2010, the Financial Industry Regulatory Authority (FINRA) hosted a webinar titled “Implementing Compliance Practices for Social Media.” The focus of the webinar was FINRA’s recently released Guidance on Blogs and Social Networking Web Sites (the Guidance) (prior BLOG post HERE). The panel was comprised of FINRA and industry representatives, who discussed best practices for firms looking to participate in social media forums.
At the beginning of the presentation, FINRA reiterated that its Guidance only addresses use of social media for business purposes. A FINRA representative stated that FINRA is “not trying to reach into the personal use of social media by registered representatives.” Nevertheless, firms that permit their personnel to use social media for personal purposes, were cautioned to adopt policies detailing the type of information that may or may not be posted. For example, some firms only permit their personnel to post “business card” information on their personal Facebook pages.
Although it was once thought that firms would be shut-out of growth opportunities presented by social media, FINRA has made clear that with the proper tools and supervision, firms can participate in this forum. Firms are advised, however, that all advertisement, advice or other business conducted via social media channels must comply with FINRA’s rules and regulations. The requirements related to record-retention and supervision pose the greatest challenges. Several suggestions for “best practices” were provided, such as:
- Adopt policies and procedures related to personal and professional use of social media;
- Provide guidance on how to comply with firm policy and FINRA rules;
- Monitor use and block access to prohibited sites and features (i.e. a firm may provide access to LinkedIn but prohibit access to the recommendations feature);
- Provide training to staff on technology and polices;
- Perform on-going evaluations to ensure regulatory compliance with record retention and surveillance requirements;
- As technology changes, revise and update policies and procedures; and
- Prior to providing access to social media sites, consider representatives’ compliance history and require representatives to participate in training.
One of the panelists, from New York Life Insurance Company, stated that her firm has engaged a vendor to assist it with FINRA compliance. She recommended that when selecting a vendor, a firm should make sure that the vendor will be able to retain and retrieve all records from social media activity and to move that information into the firm’s surveillance system for review.
FINRA explained that although the Guidance is not a rule, it should be followed to ensure compliance with its FINRA rules and regulations. Additionally, FINRA expects that new rules will soon be adopted related to issues addressed by the Guidance. FINRA examiners, analyzing a firm’s participation in social media and compliance with the FINRA rules, will expect the firm to: (1) have written procedures; (2) enforce compliance with those procedures; and (3) perform testing to ensure that monitoring and surveillance processes are working.
Ice Miller representatives participated in the FINRA webinar and will continue to follow these issues. For more information about FINRA compliance, please contact Ice Miller at email@example.com.