In a comment response letter filed with the SEC last month, FINRA indicated that it is amending proposed FINRA Rule 2210 to exclude messages posted on interactive electronic forums from existing filing requirements. This will most certainly ease the burden on firms wanting to effectively leverage social media.
The proposal for FINRA Rule 2210 consolidates the six categories of communications from existing NASD Rule 2210 into three categories: institutional communication, retail communication, and correspondence. Under the new classification, social media content will be treated as “retail communication” rather than as a “public appearance”. Fortunately, FINRA has been careful in the proposal to exclude social media postings from typical pre-approval requirements saying:
“…requirements of paragraph (b)(1)(A), which require a principal to approve retail communications prior to use, will not apply to retail communications that are posted on an online interactive electronic forum…”
However, as a side effect, it seemed that the existing post-use filing requirements applicable to other types of retail communication would also apply to social media. FINRA’s recent decision to amend the rule to specifically exclude interactive electronic communication is extremely welcome news:
“FINRA recognizes that a member may face supervisory and operational difficulties if it is required to file an online forum post given that the member will be supervising such communications in the same manner as correspondence. Accordingly, FINRA is amending proposed FINRA Rule 2210(c)(7) to add a filing exclusion for retail communications that are posted on online interactive electronic forums.”
It is great to see FINRA taking a pragmatic approach towards social media. Overall, we are excited that FINRA Rule 2210 will build upon and codify the guidance originally laid out in Regulatory Notice 10-06. Specifically, the decision to eliminate pre-approval requirements for social media, and adopt post-review supervision instead, makes a lot of sense to us and fits nicely with our vision for ArchiveSocial. Happy tweeting!
