The Socially Savvy Advisor + Website: Compliant Social Media for the Financial Industry

Chapter 8What Does FINRA Say about Social Media?

The twin goals of protecting investors and overseeing registered representatives in the broker/dealer channel has been the responsibility of the Financial Industry Regulatory Authority (FINRA). The self-regulating arm of the brokerage industry, FINRA is no stranger to interpreting technological change to its member advisors.

As long ago as 1999, the agency specifically likened a registered representative's participation in Internet chat rooms to making in-person presentations to investors, subject to the same rules governing such presentations. (For example, a firm's registered principal does not have to approve extemporaneous comments in advance that are made at such events.) Four years later FINRA codified the phrase public appearance to include participating in interactive electronic forums.

The environment continues to evolve as social media use in the business and personal world grows exponentially. In 2009, FINRA formed a committee of agency staff and industry reps to examine the implications of social media. The goal, the agency said, was “to ensure that—as the use of social media sites increases over time—investors are protected from false or misleading claims and representations, and firms are able to effectively and appropriately supervise their associated persons' participation in these sites.”¹ FINRA added that it wanted a flexible approach that would allow firms to communicate with clients and investors using the ...