FINRA Regulatory Notice: Application of Communications Rules to Social Media Use

Mututal Funds

Feb. 2, 2010 -- Prompted by an increase in the use of social media for business purposes, FINRA released Regulatory Notice 10-06 on January 25, 2010, to provide guidance to firms regarding the application of FINRA’s communications rules to social media sites and blogs such as LinkedIn, Twitter and Facebook. The Notice offers guidance on recordkeeping and suitability responsibilities, types of interactive electronic forums, supervision of social media sites, and third-party posts. Our fund clients should review this recent guidance, especially if they utilize social media to advertise to or communicate with shareholders or potential shareholders.

FINRA’s Notice includes the following guidance:

  • Firms should ensure their policies and procedures will result in effective supervision of personnel using social media for business purposes.
  • Personnel must have the appropriate background and training to utilize blogs and social networking web sites.
  • Firms must ensure that the use of such media by firm personnel will not present undue risk to investors by communicating unsuitable recommendations, false or misleading claims, or inadequate disclosures.








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