Broker-dealers don't have to track every message sent through social media — only the ones that relate to business purposes. And unscripted interactions? They can be reported after they occur.
That's the latest message from the Financial Industry Regulatory Authority on the use of Facebook, LinkedIn and other social media.
In long-awaited guidance published on its website, the watchdog for the brokerage industry offered fresh details about the approvals broker-dealers need before communicating with potential or existing customers on social media sites or via Twitter. The guidance expands on a regulatory notice issued by Finra in January 2010.
The key message: brokerages have supervisory and recordkeeping obligations based on the content, not the medium, of the communications.
Broker-dealers must track and supervise messages that deal with business, most specifically. However, companies also must have systems in place to supervise and retain interactions with customers, if they are made through personal mobile devices.
A broker who mentions his or her employer on a site such as LinkedIn must also get approval from the firm.
Broker-dealers don't need preapprovals for so-called unscripted interactions or instant messages but must alert their supervisors after the fact.
The Securities and Exchange Commission has not issued guidelines for social networking, leaving the Investment Advisers Act of 1940 to speak for it. Finra published a regulatory notice offering guidance on the use of social media in 2010.
Finra offered some key questions and answers in a recent communique to member firms. Questions include: Must material changes to static content posted by a firm or its associated persons on a social media site that contains business communications receive prior approval by a registered principal? May associated persons use personal communication devices and other equipment, such as smartphones or tablet computers, to access firm business?
