Thursday, June 20, 2013

FINRA Targeting Social Media

A targeted examination letter from theFINRA has turned up the heat on firms using social media.  According to On Wall Street, the letter makes six requests ranging in scope from a general explanation of social media use to the names and Central Registration Depository numbers of the top 20 producing advisors using social media. As the first broad "sweep" done on social media, it illustrates that FINRA will be holding firms to a higher standard of compliance in this relatively new communication channel, said Jimmy Douglas, director of alliances and industry relations Smarsh,

I am not sure that I agree with Mr. Douglas, who has a financial interest in a "higher standard of compliance" as a director of Smarsh, but this is certainly an indication that FINRA is preparing to conduct examinations, and to file charges, for misuse of social media.

My practice areas all converge at the intersection of the Internet and broker-dealer regulation and regularly advise firms and brokers on the use of the Internet, Twitter, Facebook and LinkedIn. Some of my commentary on social media is here at the blog. We can expect signifcant fines by FINRA for social media violations.  If your firm receives an inquiry from FINRA regarding your use of social media, give me a call at 212-509-6544, or send me an email at, and let's see if we can help you avoid those issues.

FINRA Launches Social Media Spot-Checks | On Wall Street