Broker Dealers and Investment Advisers Need to Have Policies and Procedures in Place for Social Media Use

August 26, 2011

A recent FINRA Action highlighted the need for broker dealers and investment advisers to implement policies and procedures for social media use.  FINRA brought this action because the registered representative had created websites related to her firm without obtaining firm approval, on several occasions she falsely stated online that she was not affiliated with any broker dealer, and she was using her Twitter account to give stock recommendations without making the necessary disclosures.  As a result of this conduct, FINRA fined her $10,000 and suspended her from associating with a broker dealer for one year.

This FINRA Action should serve as another remind that if you have not already done so, it is time to implement policies and procedures that address social media use.  These policies and procedures should address retention of online communication, supervision of representatives’ use of social media, and how your firm will be represented online.  While the US Securities and Exchange Commission (“SEC”) has not released any guidance on social media use, FINRA has issued Regulatory Notice 10-06 and Regulatory Notice 11-39 which provide guidance on using social networking sites for business communications.

If you would like to discuss how RIA Compliance Consultants, Inc. can help your registered investment advisor update its written policies and procedures, please schedule a time through our online calendar.  Simply click here and select an available time that is convenient for you.  One of our consultants will then give you a call at your selected time.

Posted by Bryan Hill
Labels: Social Media, Written Policies and Procedures