With the steady rise in use of social media in the fund industry, FINRA enacted two new communication rules that pertain specifically to electronic communications in the last three years. The two regulatory notices released in January 2010 and August 2011 provided the securities industry with guidance on how to use social media to communicate with the public in a way that adheres to FINRA’s overall communication rules. This June, FINRA took an additional step, issuing a sweep letter to brokers and dealers to determine their compliance with the social media communication rules. FINRA’s June sweep letter seeks information on how firms use social media at the corporate level to conduct business, an explanation of how the firm’s brokers use social media in conducting firm business, the company’s written supervisory procedures on social media use, and a summary of how the firm monitors compliance of the firm’s social media policies. The sweep letter also included a request for information on the firm’s top 20 producing brokers who used social media to interact with retail investors.
To help companies respond to the sweep letter, Morrison Foerster released a client alert with links to resources that companies can use to learn what they can expect during the periodic spot checking by FINRA.