• FINRA Notice 11-39 Highlights

    This past Thursday FINRA took another step towards helping firms adopt social with the release of Notice 11-39. Just like Notice 10-06, this release is aimed at addressing specific questions being raised by the industry. Notice 11-39 is not meant to alter any of the guidance previously provided, but rather provide further clarification.

    Earlier in the month FINRA submitted proposed changes to NASD 2210 to simplify the guidelines around communications with the public. These changes not only simplify many issues for the industry, but they also provide insight into how FINRA interprets or plans to interpret the communication guidelines.

    Back to Notice 11-39. In general, the content is very clear and does address many of the questions we’ve been hearing from the industry. I won’t walk through the entire Notice, but rather focus in on some of the more interesting aspects.

    The first topic is around the review of a rep’s social media presence before launch. It is clear from 10-06, this notice and 2210 that aspects of the site, like profiles, must be approved by a registered principal prior to use. Much has been made of the notion of having to pre-review the first post on a rep’s social media site. While FINRA mentions that some firms require this, it does not say that it is required – an important distinction. If you are a firm taking this approach, remember you can always provide a handful of pre-approved first posts to the field to get started.

    FINRA goes on to reinforce this point by saying “unscripted participation in an interactive electronic forum comes within the definition of public appearance.” And remember public appearances DO NOT require prior approval by a registered principal. Not surprisingly, this clarification aligns with the proposed changes to NASD 2210 – making it clear that this content can be supervised in a post-review fashion.

    There is a lot of discussion around personal devices and whether the recordkeeping requirements apply. FINRA clarifies that the device is irrelevant, it is the content of the communication that must be considered. Later on in the Notice there is more discussion around personal devices, but here they focus on whether or not personal content must be retained and supervised. FINRA points out that firms can choose to treat all content created on these devices as business communications. However, another approach is to flag content as personal vs business such that firms have flexibility in how they supervise the material. In this scenario firms would have the ability to supervise 100% of the business-related social media communications while only conducting spot audits on the personal information. A huge time saver for the supervisory teams.

    On the topic of technology, Question 3 looks at solutions that can automatically delete content after it has been read and sent. This type of technology typically applies for SMS (i.e., text messages). Regardless of if a solution exists to automatically delete content, if it is related to “business as such” it still must be retained and supervised.

    One item that gets referenced over and over is training and education. Just as they do in Notice 10-06, FINRA points out “a firm’s policies and procedures must include training and education.” They also share that some firms require reps to “Certify on an annual or more frequent basis” that they are acting in a manner consistent with the firm’s policies. For more suggestions on what you need to include in your training and education program, check out the recorded webinar from our social media lifecycle series focused on training.

    What did you think of the notice? Do you still have questions? If so please share them below.

    Category: Compliance, FINRA/SEC | Tags: , , , , .


One comment on “FINRA Notice 11-39 Highlights

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