FINRA Explains Social-Media Use for Brokers

FINRA, the Financial Industry Regulatory Authority, is the watchdog agency for the financial brokerage industry. In January 2010, FINRA issued Regulatory Notice 10-36 cautioning brokerages about broker-dealers’ use of social media. FINRA released additional guidance last month, expanding upon the notice issued last year.

In short, the FINRA guidance explains that the supervisory and recordkeeping obligations that apply to any business-related communications apply equally when those communications are sent via social media. Companies also must oversee and track all customer interactions sent through personal mobile devices.

Brokers do not need preapprovals for “unscripted” interactions (i.e., unplanned communications), but they must alert their supervisors after the fact.

Also, a broker must be get advance approval from his or her employer before mentioning the firm on any social networking site, such as LinkedIn.

To explain the Guidance, FINRA is publishing a three-part podcast, the first segment of which is available now.

Guidance on Blogs and Social Networking Sites, Full Text of Regulatory Notice 11-39 (PDF)

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