In January 2010, FINRA
issued Regulatory Notice 10-06 in an attempt to provide guidance on the
application of FINRA rules governing communications with the public to social
media sites. The guidance did not provide much that was new. Largely, FINRA
pointed out that the existing communication and record-keeping rules applied.
Too bad that the site did not allow you to take the steps needed to comply with
the existing rules.
Apparently, the guidance raised enough questions that
FINRA decided to provide some additional guidance. It is not intended to alter
the principles or the guidance provided in Regulatory Notice 10-06. Anyone
expecting something new or innovative will be disappointed.
Q1: Does determining whether a communication is subject
to the recordkeeping requirements of SEA Rule
17a-4(b)(4) depend on whether an associated person uses a personal device
or technology to make the communication?
A1: SEA Rule 17a-4(b)(4) requires a firm to retain
records of communications that relate to its "business as such." Whether a
particular communication is related to the business of the firm depends upon
the facts and circumstances. This analysis does not depend upon the type of
device or technology used to transmit the communication, nor does it depend
upon whether it is a firm-issued or personal device of the individual; rather,
the content of the communication is determinative. For instance, the
requirement would apply if the electronic communication was received or sent by
an associated person through a third-party's platform or system. A firm's
policies and procedures must include training and education of its associated
persons regarding the differences between business and nonbusiness
communications and the measures required to ensure that any business
communication made by associated persons is retained, retrievable and
The FINRA rules came first and they are in place for a
good reason. It's up to the firm to find a may to meet the compliance standards
if they want to use third-party websites to publish information, communicate
with the public, or communicate with clients. If cloud providers want to
take over company-hosted communications they need to but more effort into the
record-keeping and compliance requirements of the business world.
additional commentary on developments in compliance and ethics, visit Compliance Building,
a blog hosted by Doug Cornelius.
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