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5 Social Media Compliance Takeaways from the 2012 FINRA Advertising Regulations Conference


FINRA Social Media ComplianceRecently, eDynamics exhibited at the 2012 FINRA Advertising Regulations Conference in Washington, DC. While at the conference, we set aside some time to sit in on a few informational sessions regarding social media compliance. What we found were some good clarifying points regarding social media compliance from FINRA executives.

We've boiled our findings down into the 5 points listed below. We hope that they help to answer some questions that you may have had regarding FINRA and the use of social media in regulated organizations.

Static versus Interactive Content

FINRA has recently acknowledged the interactive nature of social media communications and has thus made the distinction between what they've defined as static content and interactive content.

Static content consists of planned communications that are generally advertised to the target audience and cannot be altered our commented on once published. A traditional advertisement in a newspaper, on a website ad, or in a magazine are examples of this; there is no way for your target audience to comment on such content and interact with you or your organization.

Interactive content consists of communications that are, similar to static content, advertised to a target audience, but the target audience is able to respond and comment on such content. Generally, interactive content is not planned to the extent that static content is. Examples of interactive content are Twitter, Facebook, or Linkedin posts; the important component being that one can initiate a dialog with the target audience as a result of the interactive communication.

In determining the "line" to draw between static and interactive content, one should consider whether or not commenting on the communication is possible, whether or not the communication can be modified by its author once published, and the timing of the dialogue (i.e. - how long it takes for a dialogue to begin on a communication). If the answer to the above considerations is yes, then the content is interactive.

From a compliance perspective, you need to archive both static and interactive communications, but only static content needs to be pre-approved by FINRA.

3rd Party Content on Interactive Websites

In one of the social media compliance sessions, a question arose: What is the extent of a firm's responsibility for 3rd party content on interactive social media websites?

In other words, can a firm be held responsible for the content / context of comments that are authored by 3rd parties in response to a firm authored post on websites like Twitter, Facebook, or Linkedin?

From a respsonibility standpoint, just because such comments exist, does not mean that your firm has approved such comments. Therefore, a firm is not responsible for 3rd party comments on firm authored posts.

That being said, record-keeping requirements still apply to 3rd party content. So, your social media archiving solution must be able to archive not only firm authored posts, but also 3rd party comments to those posts.

Social Media Archiving Solutions

Because interactive content does not need to be pre-approved, the core functionality of your social media compliance software must be the capability to archive content. That's not to say that pre-approval is not important from an internal social media policy perspective; you may still want to internally pre-approve tweets and posts internally even if FINRA does not mandate this. But, again, the critical feature of any social media compliance solution must be archiving.

FINRA also noted that the main difficulty with social media archiving today is the reconstruction of full conversation threads (posts and their related comments) into a format that is easily discoverable and understandable in your social media compliance software. Some social media compliance software providers do a better job at this reconstruction than others, but most can accomplish this task at this point.

Example FINRA Social Media Requests

Related to the above point on the reconstruction of full conversation threads and underlining its importance, FINRA provided an example of a regulatory request, in the context of social media.

For example, "Please produce all tweets between two individuals on certain dates related to a certain topic or keyword." This request is similar in nature to a request that asks for email content, the only difference here is the underlying medium used to convey the message: social media.

This again highlights the importance of your social media compliance solution's capability to reconstruct the full conversation thread and also to integrate the social media content into your existing email archiving solution so that you can search for such content in a familiar manner.

Also, FINRA provided some examples active / past social media cases whereby penalties and fines were levied. It's clear that FINRA is serious about social media compliance.

What FINRA Examiners are Looking for

So, what are FINRA examiners looking for when it comes to social media compliance?

1. Policies and Procedures

Of most importance, FINRA is looking to ensure that member firms have robust social media policies and procedures in place. FINRA gave examples where they had asked firms to produce written copies of their internal social media policies - so be sure to have a social media policy in place.

2. Implementation of Policies and Procedures

FINRA wants to see demonstrable evidence that internal social media policies and procedures have been implemented in the firm. Methods of providing this evidence are to show that employees have been trained and perhaps have signed off on such internal social media policies.

3. Record-keeping / Retention Compliance

FINRA is also interested in seeing if you are complying with record-keeping and retention requirements, from a social media perspective. You may want to have the capability to demonstrate your social media compliance software solution to examiners.

In Summary

FINRA did a great job at the 2012 FINRA Advertising Regulations Conference at answering the many questions that member firms have regarding social media compliance. Many critical points have been clarified and confusion eliminated. FINRA has also made it clear that social media compliance is not to be taken lightly, so if your firm intends to embark on the social media journey, then be sure to have policies, procedures, and compliance solutions in place before doing so.


Do you have any helpful information in reference to a person identifying themselves as a customer of your bank on social media? Are there rules against this? We are being told we should delete this post because the customer said they had several CD's with us.
Posted @ Wednesday, April 10, 2013 11:23 AM by April Alford
Hi April, 
We are not attorneys or the like, but based on the commentary from FINRA during this conference, it would appear that you (the bank) are not responsible for 3rd party comments made via social media. 
A takeaway from the conference: 
"From a responsibility standpoint, just because such comments exist, does not mean that your firm has approved such comments. Therefore, a firm is not responsible for 3rd party comments on firm authored posts." 
There's no way for you to control a 3rd party's social media content.
Posted @ Wednesday, April 10, 2013 12:25 PM by Christopher Ricciuti
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