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Social media guidelines that some firms may not be following

The use of social media to sell products and services has exploded over the past few years. Since more people (and potential investment customers) are using smart phones and tablets, it has become more commonplace to disseminate information and inform consumers of securities through Internet ads, text messages and other social media platforms.

However, financial firms may not be following the same rules applicable to other forms of securities advertisements or keep records. On average, financial firms are not fully embracing social media to promote products because they may not be following FINRA guidelines. With that, this post will highlight a few of these guidelines. 

Procedures – FINRA examiners will want to know about a firm’s procedures to supervise communications, both external and internal. After all, it is important for examiners to know how products are being promoted and how consumer complaints are addressed.

Record retention – In the same vein, examiners will want to know about a firm’s record retention system. Indeed, this is important for many other types of records that financial firms must keep, but Twitter statements from representatives and responses to consumers must be properly archived in the event of a review.

Proper education – Most importantly, representatives and executives alike must be educated on the difference between personal and business communications and how each may affect the other when it comes to FINRA audits.

While these guidelines may apply primarily to brokers and investment firms, it is also important for investors to know about the different regulations that apply to communications. This way, wronged investors may have a way to know when communications are improper. 

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