Corporate Social Media Policy

It’s a fact of life. Brokers use social media to do business. FINRA has put rules in place protect investors from false, misleading claims, exaggerated statements, and material omissions. Firms also put rules in their contracts with brokers to protect their clients and themselves. This is yet another area you have to navigate as a financial professional to stay in this business.

According to FINRA Rules and SEC regulations, brokerage firms and their registered representatives must retain records of communications related to their “business as such.” The “business as such” requirement is based on the content of the communication not the type of device or technology used to receive or send the communications. These records must be preserved for a period of not less than three years.

FINRA’s advertising rules and guidance do not apply to an associated person’s personal use of social media. However, broker-dealers must educate their people on the difference between personal and business uses of social media. If firm personnel use a personal site for business, then this may result in a situation where the firm is unable to retain records of business-related communications as required.

Firms must have the ability to supervise the business-related content associated persons are communicating on these sites, including possible suitability determinations if recommendations are made. A registered principal must review prior to use any social media site that an associated person intends to use for business. The principal may only approve a social media site if the principal has determined the associated person can and will comply with applicable rules. Firms must also understand the difference between static content and interactive communications. Third-party posts and links to third-party websites are also an important issue for firms and brokers.

The issue here is what financial services or products brokerage firms and brokers talk about on social media, and whether they are suitable for a given client. Communications must be “fair and balanced,” whether broadcast by social media, email, or print.

Contact us today to discuss your firm’s policies and procedures in this area, your contracts with reps, and the FINRA and other rules that govern them.