Ajay Tejwani

Category: Social Media

FINRA Regulatory Notice 12-29 and Its Marketing Requirements

One of the largest changes implemented by Financial Industry Regulatory Authority, Inc (FINRA) dealt with the rules and regulations of financial services organizations under what used to be 6 categories. Now there are only 3categories: retail, correspondence, and institutional communication. In an online article “FINRA Regulatory Notice 12-29: Its Impact on Social Media Use”Chris Ricciuti points out the implications this has for social media communications:

All social media communications fall under the heading of retail, since they can reasonably be expected to reach hundreds, if not thousands, of people each day; however, since online forum posting falls under one of the possible exemptions, it may not require pre-approval.

Additionally, provided the narrative portion has already been approved, and the only changes are statistical updates, there is no re-file required.  This more streamlined approach to financial communications is an attempt to lighten the regulatory requirements on firms, lessening the cost of staying compliant.

But Financial Services organizations should begin, or continue to, archive their social media content. With the potential for regulatory requests or audits always looming nearby, one should not operate without the capability to produce previously published content, should a regulatory request arise.

In summary, while the rules around social media use by regulated organizations have been softened from a filing perspective, archiving all published content is still critical. We like to draw an analogy to email- you don’t necessarily need to pre-approve all email content, but you certainly need to archive all of it.

With the rules to going into effect February 4, 2013, it’s crucial that marketers attempt to fully understand the technical regulatory notice, in order to avoid unnecessary fines.

For social media marketers the good news is that regulatory standards appear to be lightened, for the time being, but that could quickly change:

FINRA Rule 2210(c)(7)(M) excludes from filing retail communications that are posted on online interactive electronic forums, such as an electronic bulletin board or an interactive forum that is contained on a social media website. Under NASD Rule 2210, posts on interactive electronic forums are considered public appearances.30 Under FINRA Rule 2210, such posts will be considered retail communications, assuming the forum is available to retail investors. Nevertheless, FINRA is excluding these posts from Rule 2210’s filing requirements.

Businesses should definitely stay abreast of the new laws’ implications as they change and begin to have real impacts! While the implications of the new laws are not fully understood by most, Global Relay (the largest archiver for LinkedIn compliance) suggests that businesses that are involved with social media should start archiving to ensure compliance, and stay ready for audits. Whether you use Global Relay or another method, if you are involved in the social media industry, you should think about how you are going to archive and staying up to-date on the new, ever-changing regulations!

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