Chapter 9.6

Question 1

FINRA member use of Social Media Web Sites

Answer 1

Members must have WSPs that address:

• Recordkeeping responsibilities
• Suitability Responsibilities
• Supervision of social media sites
• Third Party Postings

Question 2

Recordkeeping responsibilities of social media sites

Answer 2

Members must retain records of communications made through social media sites by the member personnel for a period of not less than 3 years if they are related to the B/D’s business

Question 3

Suitability responsibilities of social media sites

Answer 3

Members who make recommendations on various social media sites are held to FINRA’s suitability requirements. Note also that some web sites include functions that make their content widely available or that limit access to one or more individuals. B/D’s are responsible that recommendations made by personnel are suitable for every investor to whom it is made.

Question 4

Supervision of social media sites

Answer 4

• Prior principal approval is not required for interactive electronic forums. However, firms must supervise and be able to capture these interactive electronic communications in a manner reasonably designed to ensure that they do not violate the content requirements of FINRA’s communications rules
• A principal must review, prior to use any social media site that an associated person intends to use for business purposes
• Regulatory requests, chat room postings and emails must be captured and reviewed by the firm
• Firms and associated persons are not allowed to use any type of communication device which automatically erases or deletes the content of an electronic communication

Question 5

Third Party Postings of social media web sites

Answer 5

FINRA does not treat posts by customers or other third parties as the firm’s communication with the public. Thus, the prior principal approval, content, and filing requirements do not apply to these posts.