On January 25, 2010, FINRA issued Regulatory Notice 10-06, which provides guidance to securities firms and brokers on communications with the public through blogs and social networking websites. The Notice follows previous rules issued by FINRA on Internet communications, including NASD Rule 2210, which defines the term “public appearance” to include participation in an interactive electronic forum. The Notice is presented in question and answer format and includes the following recommendations and conclusions:

  • Every firm that intends to communicate through social media sites, or permit its associated persons to communicate through such sites, must comply with specified record retention requirements.
  • Any communication via a social media site that constitutes a “recommendation” is also subject to suitability requirements for every investor to whom it is made.
  • In addition to triggering FINRA’s suitability rule, communications containing recommendations of specific investment products through social media sites may trigger disclosure requirements under the federal securities laws, such as Rule 482 under the 1933 Act and the filing requirements of Section 24(b) of the 1940 Act.
  • Interactive electronic communications by the firm or its registered representatives must be supervised in a manner reasonably designed to ensure that FINRA’s communications rules are not violated.
  • Third-party content posted to social media sites established by the firm or its personnel will generally not be treated as communications with the public, unless such content becomes “attributable” to the firm under the “entanglement” or “adoption” theories outlined in the Notice.