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Replies to post #80140 on Pacific Gold Corp fka PCFG
02/25/12 12:27 PM
02/25/12 12:49 PM
Q5: Social networking sites, such as Facebook, Twitter and LinkedIn, typically include
both static content and interactive functions. Are these sites interactive
electronic forums for purposes of Rule 2210?
A5: Social networking sites typically contain both static and interactive content. The
static content remains posted until it is changed by the firmor individual who
established the account on the site. Generally, static content is accessible to all
visitors to the site.
Examples of static content typically available through social networking sites
include profile, background or wall information. As with otherWeb-based
communications such as banner advertisements, a registered principal of the
firmmust approve all static content on a page of a social networking site
established by the firmor a registered representative before it is posted.12
Firmsmay use an electronic systemto document these approvals.
Social networking sites also contain non-static, real-time communications, such
as interactive posts on sites such as Twitter and Facebook. The portion of a social
networking site that provides for these interactive communications constitutes
an interactive electronic forum, and firms are not required to have a registered
principal approve these communications prior to use. Of course, firms stillmust
supervise these communications, as discussed below.
Supervision of SocialMedia Sites
Q6: Howmust firms supervise interactive electronic communications by the firmor
its registered representatives using blogs or social networking sites?
A6: The content provisions of FINRA’s communications rules apply to interactive
electronic communications that the firmor its personnel send through a social
media site.While prior principal approval is not required under Rule 2210 for
interactive electronic forums, firmsmust supervise these interactive electronic
communications under NASD Rule 3010 in amanner reasonably designed to
ensure that they do not violate the content requirements of FINRA’s
communications rules.13
Firmsmay adopt supervisory procedures similar to those outlined for electronic
correspondence in Regulatory Notice 07-59 (FINRA Guidance Regarding Review
and Supervision of Electronic Communications). As set forth in that Notice, firms
may employ risk-based principles to determine the extent to which the review of
incoming, outgoing and internal electronic communications is necessary for the
proper supervision of their business.
For example, firmsmay adopt procedures that require principal review of some
or all interactive electronic communications prior to use ormay adopt various
methods of post-use review, including sampling and lexicon-based search
methodologies as discussed in Regulatory Notice 07-59.We are aware that
technology providers are developing ormay have developed systems that are
intended to address both the books and records rules and supervisory procedures
for socialmedia sites that are similar or equivalent to those currently in use for
emails and other electronic communications. FINRA does not endorse any
particular technology.Whatever procedures firms adopt, however,must be
reasonably designed to ensure that interactive electronic communications do
not violate FINRA or SEC rules.
Firms are also reminded that theymust have policies and procedures, as
described in Regulatory Notice 07-59, for the review by a supervisor of employees’
incoming, outgoing and internal electronic communications that are of a specific
subject matter that require review under FINRA rules and federal securities laws,
including:
NASD Rule 2711(b)(3)(A) and NYSE Rule 472(b)(3), which require that a firm’s
legal and compliance department be copied on communications between
non-research and research departments concerning the content of a research
report;
NASD Rule 3070(c) and NYSE Rule 351(d), which require the identification
and reporting of customer complaints; NYSE Rule 401A requires that the
receipt of each complaint be acknowledged by the firmto the customer
within 15 business days; and
NASD Rule 3110( j) and NYSE Rule 410, which require the identification and
prior written approval of every order error and other account designation
change.
AI
