Preparing for FINRA Spot-Checks: 3 Simple Steps to Social Compliance

Marketing • Posted on Sep 6, 2013
checkThe Financial Industry Regulatory Authority (FINRA) announced yesterday that it is conducting  spot-checks on social media communications such as Facebook, Twitter, LinkedIn and blogs. According to FINRA Rule 2210(c)(6), each firm’s written (including electronic) communications are subject to a periodic spot-check procedure. FINRA’s Advertising Regulation Department requests that firms provide the following:1.  An explanation of how the firm is currently using social media (e.g., Facebook, Twitter, LinkedIn, blogs) at the corporate level in the conduct of its business. Please be specific as to the business purpose of each social media  platform as the firm uses it.2.  Please provide the following with respect to the firm:
  • The URL for each of the social media sites used by the firm at the corporate level,
  • The date the firm began using each of the sites identified above,
  • The identity of all individuals who post and/or update content of the sites identified above.

3.  An explanation of how the firm’s registered representatives and associated persons generally use social media in the conduct of the firm’s business, including the date(s) the firm began allowing the use of each social media platform and whether such usage continues.

4.  The portion of your firm’s written supervisory procedures concerning the production, approval and distribution of social media communications in effect during the time period February 4, 2013 through May 4, 2013.

5.  An explanation of the measures that your firm has adopted to monitor compliance with the firm’s social media policies (e.g., training meetings, annual certification, technology).

6.  A tabular list of your firm’s top 20 producing registered representatives (based on commissioned sales) who used social media for business purposes to interact with retail investors as defined in FINRA Rule 2210(a)(6) during the time period February 4, 2013 through May 4, 2013. Please identify the type of social media used by each individual for business purposes during this time period. Please include the individual’s full name and CRD number, as well as the dollar amounts of sales made and commissions earned during the period.

With FINRA clearly stating its social media guidelines, the question many advisors are asking themselves is this: “What do I do now?” Luckily, there are three simple steps to avoiding regulatory fines and keeping your advisors actively online.

Step 1: Establish a Strong Social Media Policy

This is where having a strong social media policy comes into play. Your policy should stand as a living document for your firm, continuously evolving as industry regulations and technology change. A firm’s policy should clearly outline the goals it wishes to accomplish on social media, who is allowed to participate in online activities on behalf of the firm, and which social media platforms are aligned with its business goals. That way, if a spot-check were to occur, firms can easily explain what platforms advisors are using and why.

By taking the time to discuss the firm’s online strategy, compliance priorities and social media best practices, advisors can avoid regulatory hurdles in the long run and set their businesses on the path to a strong, successful and, most importantly, compliant social media presence.

A common question and concern is: “How can I keep up with the pace and make changes to this document, which is intended to be a serious set of guidelines for our business?”. The answer is to view your social media strategy, policy and procedures as you would a business plan. A plan that sets the foundation for how you will proceed, but one that evolves as your business matures and grows. Likewise, as you establish your brand identity and your voices, both corporate and individual, on social media, you will see engagement and feedback. Learn from those experiences to tweak and tune this living document to stay in step with you and the market.

Step 2: Continuous Training

Before advisors start building engagement online, they must be trained on social media best practices. Discuss social media do’s and don’ts regarding what should be mentioned online, how they should conduct business on social media, and what forms of content are permissible according to the firm social media policy.

This is an opportunity to not only ensure your governance standards are clearly communicated, but also to contribute to fostering a larger audience of strong social media “citizens”. This virtual public square can be a great place for conversations, expanding networks and advancing important topics to our industry. However, it also is a place where etiquette matters and it is slightly nuanced to the manners we have when live in person – as we rely on body language and expressions to accentuate our words. In digital form, we need to take care to craft our words without the benefit of those unspoken signals.

Step 3: Archive All Social Media Activity

Think of social media archiving as your compliance safety net. Archiving solutions, such as RegEd Archiving and Surveillance, capture email and social media activity for the advisors within a firm, including platform URLs, posts and updates. Additionally, all online engagement is time stamped within the archives, a convenient feature should a request for information occur.

For financial professionals, compliance is the number one priority when online. Even if advisors are following the guidelines outlined in their policies and demonstrating the best practices learned during training, archiving is still a must in order to ensure compliance with FINRA regulations.



Caitlin Zucal is Marketing Coordinator for RegEd and manages the company’s social media presence. A graduate of The Ohio State University, Caitlin joined RegEd in 2012 after the company’s acquisition of Arkovi Social Media Archiving. She is an admitted serial Facebook and Pinterest contributor and can be found on Twitter at @Caitlin_Zucal.


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Disclaimer: The content of this article is for informational purposes only. If you are planning to implement a new marketing practice and are unsure what the regulations are, always contact your compliance department first.

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