FINRA Regulatory Notice 12-29
In the wake of continuing legislation geared at protecting consumer interests, many industries find marketing opportunities limited.  The Financial Services industry has been the focus of much of the tightening legislation, particularly in how different loan packages are offered, investment opportunities are marketed and futures are sold. Social media offers incredible return on investment for marketing campaigns, making it a preferred area of focus for all industries, but recent actions by FINRA, the largest independent securities regulator, has left Financial Services industry professionals without a clear understanding of allowable marketing efforts.

Before kicking off a social media marketing campaign, it is crucial for financial companies to understand advertising limitations to prevent negative action by the SEC.  The recent FINRA Regulatory Notice 12-29, offers some guidance on the new, less stringent, requirements for marketing.

FINRA Guidelines Explained

Regulatory Notice 12-29 specifically deals with the rules and regulations for communications and information distribution by Financial Services organizations.  The largest change is the narrowing of communication classifications from six categories to three.  Now, there are only Retail, Correspondence and Institutional communication categories.  For marketing purposes, retail communications are the most important, defined as any written communication made available to more than 25 retail investors within a 30-day calendar period.  Retail communications must have approval from a registered principal prior to distribution.  The exceptions to this requirement are simple.  If the information being distributed has already been approved by FINRA, and it has not been materially altered, it is exempt from the otherwise required pre-approval.  Alternatively, if the communication has no investing advice or service advertising, it is also exempt, as are interactive electronic forums, provided the firm meets previous review guidelines.

What Does 12-29 Mean for Social Media Communications?

All social media communications fall under the heading of retail, since they can reasonably be expected to reach hundreds, if not thousands, of people each day; however, since online forum posting falls under one of the possible exemptions, it may not require pre-approval.  Additionally, provided the narrative portion has already been approved, and the only changes are statistical updates, there is no re-file required.  This more streamlined approach to financial communications is an attempt to lighten the regulatory requirements on firms, lessening the cost of staying compliant. 

But Financial Services organizations should begin, or continue to, archive their social media content. With the potential for regulatory requests or audits always looming nearby, one should not operate without the capability to produce previously published content, should a regulatory request arise.

In summary, while the rules around social media use by regulated organizations have been softened from a filing perspective, archiving all published content is still critical. We like to draw an analogy to email- you don't necessarily need to pre-approve all email content, but you certainly need to archive all of it.