Tweet this: Finra spot-checking firms for social media compliance

Regulator asking for list of top 20 producing reps at the targeted B-Ds who use social media

Jun 19, 2013 @ 12:51 pm

By Dan Jamieson

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(Photo: Bloomberg News)

The Financial Industry Regulatory Authority Inc. is doing social-media compliance spot checks on some of its member firms.

In a notice posted Monday on Finra's website, the regulator said it wants broker-dealers to identify the sites used by a firm, as well as all individuals who post or update the firm's content on social-media sites.

Finra is also asking for a list of the top 20 producing registered representatives at the targeted B-Ds who used social media to interact with retail investors from Feb. 4 through May 4.

In addition, firms are being asked to explain how they monitor compliance.

The notice went out to “selected” member firms this month, Finra spokesman George Smaragdis wrote in an e-mail. He declined to name the firms and said Finra is not disclosing how many firms are being asked for the information.

No due date for a response was provided in the notice, and Mr. Smaragdis had no further information about timing.

“The initial social-media Regulatory Notice (10-06) came out over three years ago, and so it makes sense to incorporate social-media reviews into our routine surveillance,” he wrote.

Finra's rules covering communications with the public specify that the regulator can perform spot checks to ensure compliance.

Member firms and Finra have both been struggling with how to supervise the use of social media without impeding spontaneous conversations.

In August 2011, Finra provided further guidance in Regulatory Notice 11-39.

Later that year, the regulator backed off a proposal that would have required broker-dealers to file social-media postings with Finra.


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