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FINRA Targets Firms’ Social Media Activity

September 30, 2021

 

The Financial Industry Regulatory Authority’s (FINRA) exam letter released recently targets how firms use social media to bring in new business, following President Robert Cook’s assurance earlier this year. According to the targeted exam letter, the agency will review how firms acquire customers through social media, as well as how firms manage their compliance obligations “related to information collected from those customers and other individuals that may provide data to firms.”

Jennifer DiValerio, Managing Director at Foreside, shares with Wealthmangement.com that the targeted letter defines “social media influencers” as “any third party with whom the firm contracts or compensates to provide social media communications.”

“If a firm is utilizing an influencer, it’s really an extension of their firm,” DiValerio shares. “It’s an extension of their marketing program in and of itself. Therefore, they have the obligation to make sure their communications are not misleading or misrepresentative, but that they’re fair and balanced.”

Click here to learn more about why firms have to be careful in navigating the communications by social media influencers and ensuring they have the required disclosures.