FINRA: Save Those Tweets, Texts, Calls, Etc.
August 25, 2011 by Allison Bell
By ALLISON BELL
rules apply to all communications devices and technologies, FINRA officials
FINRA, Washington, talks about the rules that govern member firms’ use of
social networking websites and personal communications devices in FINRA
Regulatory Notice 11-39.
The rules apply to FINRA member firms and associated persons and entities,
including life insurance agents who sell variable life and variable annuity
FINRA released an earlier batch of social networking guidance in January
2010, in FINRA Regulatory Notice 10-06.
Some of the other existing FINRA and U.S. Securities and Exchange Commission
(SEC) rules that apply to FINRA members’ social media use include SEC Rule
17a-4(b) under the Securities Exchange Act of 1934 (SEA), which requires
broker-dealers to save some records for at least 3 years, and NASD
Rule 2210, a FINRA rule that governs “public appearances” in interactive
electronic forums, such as message boards.
SEA Rule 17a-4(b)(4), for example, applies to “all communications which are
subject to rules of a self-regulatory organization of which the member, broker
or dealer is a member regarding communications with the public,” FINRA officials
say. “The SEC has stated that the content of an electronic communication
determines whether it must be preserved.”
NASD Rule 2210, which was created by a FINRA predecessor organization,
exempts a member, broker or dealer from the need to get prior approval by a
When making social media public appearances, “firms may adopt risk-based
supervisory procedures utilizing post-use review, including sampling and
lexicon-based search methodologies, of unscripted participation in an
interactive electronic forum,” FINRA officials say.
A firm must adopt procedures to keep the interactive electronic
communications from violating FINRA or SEC rules governing matters such as a ban
on misleading statements.
FINRA officials address questions about use of new communications services
and technologies in a question-and-answer section.
FINRA officials note in the first answer that SEA Rule 17a-4(b)(4)
recordkeeping requirements have nothing to do with whether a person associated
with a FINRA member firm uses a personal device or technology to make the
“SEA Rule 17a-4(b)(4) requires a firm to retain records of communications
that relate to its ‘business as such,’” officials say. “Whether a particular
communication is related to the business of the firm depends upon the facts and
circumstances. This analysis does not depend upon the type of device or
technology used to transmit the communication, nor does it depend upon whether
it is a firm-issued or personal device of the individual; rather, the content of
the communication is determinative.”
A firm should train associated persons about the differences between business
and nonbusiness communications and the measures needed to ensure that any
business communication made by associated persons is “retained, retrievable and
supervised,” officials say.
The FINRA officials also raise record retention issues in a response to a
question about comments posted to a social media site run by a member firm or an
FINRA generally will not treat the participants’ posts as if they were the
firm’s posts, but the firm still has to keep records of all social media site
communications relating to its business as such, officials say.
FINRA officials say they approve of the idea of member firms letting
associated persons use “personal communication devices and other equipment, such
as a smart phone or tablet computer,” to run firm business applications.
But a firm must supervise the activity, and “the firm must be able to retain,
retrieve and supervise business communications regardless of whether they are
conducted from a device owned by the firm or by the associated person,”
A firm should be able to separate personal and business communications made
on the same device, officials add.
Officials suggest that one way to keep business and personal communications
separate would be to require associated persons to use separate applications for
business and personal communications.
“If possible, this application should provide a secure portal into the firm’s
own communication system, particularly if confidential customer information may
be shared,” officials say. “Of course, firms also are free to treat all
communications made through the personal communication device as business