Quick Answer
FINRA classifies social media as static or interactive. Static retail content generally needs prior principal approval, subject to the retail prior-use exceptions, while interactive content may use correspondence-style supervision. Electronic communications relating to the firm's business must be supervised and retained; content, not the channel or device, controls. Adoption or entanglement makes the firm responsible for third-party content.
The communications rules you have learned apply with equal force online. FINRA's rule on communications with the public reaches digital content the same way it reaches print: classify it, then apply the matching approval, supervision, and retention duties.
Is Social Media Content Static or Interactive?
FINRA treats social media content differently depending on whether it is posted for later viewing or exchanged in real time:
| Type | Definition | FINRA treatment | Approval required? |
|---|---|---|---|
| Static content | Pre-written posts, articles, profiles, blog entries; content posted for longer-term viewing with no real-time interaction | Treated as a retail communication (if accessible to more than 25 retail investors) | Generally yes; the retail prior-use exceptions still apply |
| Interactive content | Real-time or near-real-time exchanges: comments, chat, live posts, message boards | Keeps its own communication classification, but may qualify for correspondence-style supervision | No prior approval when the correspondence-style supervision exception applies |
- A firm-sponsored blog with static posts is generally a retail communication requiring prior principal approval, unless a specific prior-use exception applies.
- An associated person's real-time chat reply may be supervised like correspondence without being formally reclassified as correspondence.
- A firm's social media page posting a pre-written article is static content, treated as a retail communication.
Exam Tip: Gotchas
Static and interactive content can follow different approval procedures even on the same platform. A pre-written post is generally a retail communication needing prior approval. A live reply in the comments may use correspondence-style supervision instead, without becoming correspondence itself.
Who Supervises and Retains Electronic Communications?
- Firms must supervise and retain all electronic communications used to conduct securities business, including email, text messages, instant messages, social media posts, and website content
- The format does not create an exemption: an informal channel such as a text message is subject to the same supervision and retention duties as a formal letter
- Communications through digital channels remain subject to the same antifraud and not-misleading standards that apply to any other communication with the public
For a broker-dealer, the retention duty comes from the Securities Exchange Act of 1934 and the SEC's recordkeeping rules under it.
Exam Tip: Gotchas
- Electronic communications relating to the firm's business must be retained and supervised, regardless of channel. A personal message outside the firm's products, services, or business is not covered merely because it used text or social media.
When Does a Firm Adopt Third-Party Content?
- Sharing or linking to a specific third-party article or video adopts that content. A business "like" that endorses content can also create adoption.
- Adoption makes the firm responsible for ensuring the content is fair, balanced, and not misleading
- An ongoing link to an independent website can avoid adoption when it stays available regardless of favorable coverage, the publisher may update the site without breaking access, and the firm has no influence or control over the site's content.
- The firm must not link to a site it knows, or has reason to know, contains false or misleading content.
- A firm that pays for or helps prepare third-party content becomes entangled with it. Endorsing the content instead creates adoption; either route makes the firm responsible.
Exam Tip: Gotchas
- "Liking" or sharing third-party content can make the firm responsible for it. If the third-party content is misleading, the firm has adopted that misleading content.
- A direct link to a specific article adopts it without added endorsement. Distinguish an ongoing independent-site link that satisfies the separate nonadoption conditions.
How Does This Apply to a Firm's Website?
A firm's website and other internet communications are subject to the same standards as any other communication with the public:
- A firm's website content is a communication with the public: it must be not misleading, fair, and balanced, and it must be retained like any other electronic communication.
- The firm is fully responsible for the content it publishes on its own site. Static content the firm posts and controls (its homepage, product descriptions, professional bios) is treated as the firm's own communication.
- For interactive or third-party content, responsibility turns on adoption and entanglement. Sharing or linking to a specific outside article adopts it; endorsing content or helping prepare it can also create responsibility. A link alone does not make a static page interactive.
- The Administrator may require the filing of advertising and sales literature, and website content is not outside that authority simply because it is online.
- FINRA requires a member firm serving retail investors to include a readily apparent reference and hyperlink to BrokerCheck on its initial webpage intended for retail investors and on pages with professional profiles of registered persons who conduct retail business. A directory limited to names and contact information is excepted.
Exam Tip: Gotchas
- "It's just our website" is not a defense. A misleading statement on a firm's website is a misleading communication, subject to the same antifraud and not-misleading standards as a printed brochure or a phone call.
What Should You Check on Exam Day?
- Static content (a firm's own posts, homepage, bios) is generally a retail communication needing prior principal approval; interactive content (live chat, real-time replies) may use correspondence-style supervision instead.
- Electronic communications relating to the firm's business must be supervised and retained, whether formal or informal. Content controls, so a purely personal message is not covered merely because it used text or social media.
- Sharing or directly linking to a specific article adopts it. Distinguish an ongoing independent-site link that meets the separate nonadoption conditions.
- BrokerCheck links belong on the initial retail webpage and covered professional-profile pages, not every page a retail investor might view. A names-and-contact-information directory is excepted.