Articles Tagged with FINRA Rule 2111

As the use of social media becomes more prevalent and popular, businesses and financial institutions have begun to utilize the new methods of communication that social media can provide. Many businesses already maintain blogs or interactive accounts like Twitter, Facebook, and Instagram as a method of marketing and interacting with clients or prospective customers. However, social media is a relatively new and constantly changing technology that can create unique and unforeseen risks to a businesses image and regulatory compliance policies. These risks are particularly acute for registered investment advisers.

In the broker-dealer world, FINRA has already adopted rules and issued regulatory notices designed to protect investors from false or misleading claims and representations and guide member firms on how to appropriately monitor their social media participation. Although not strictly applicable to pure RIAs, these rules should be viewed as best practices:

  • FINRA Rule 2210 and NASD Rule 3010 govern the supervision of a firm’s social media communications;
  • FINRA Rule 2111 requires that social media communications, if recommending a security, must be considered suitable for the targeted investors; and
  • Record keeping of all social media communications is required under FINRA Rule 4510.

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