Q: My firm has a Facebook page and a website with a blog that allows clients to post comments. What’s our responsibility for comments or information posted by clients or others in either of those locations?
A: The answer, for the most part, depends on whether your firm has any hand in the comments, either before or after they go up.
Should the firm have no such involvement, you’re pretty much in the clear. Yes, broker-dealers have an obligation to retain records of digital communications that relate to their “business as such” as required by Rule 17a-4(b) (4) under the Securities Exchange Act of 1934.
But whether a communication must be retained, and by implication, whether a firm is responsible for what’s in it, ultimately depends on its originator and its content.
At the same time, FINRA Regulatory Notice 10-06 states that, as a general matter, posts by customers or other third parties on a firm’s social media site (or any website established by a firm or its associated persons, regardless of whether the site is part of a “social network”) do not constitute communications with the public by the firm or its associated persons under Rule 2210.
“If a rep ‘likes’ or shares favorable comments, he or she will be seen as having adopted them,” says Alan J. Foxman
That’s not true, however, if your firm plays a role in the comment’s posting or redistribution.
Regulatory Notice 10-06 states that third-party posts on a firm or an associated person’s business website may constitute communications with the public by the firm or an associated person if the firm or an associated person has paid for or been involved in the preparation of the content (which FINRA calls “entanglement”), or if the firm explicitly or implicitly endorses or approves the content (which FINRA classifies as “adoption”).
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FINRA does not regard unsolicited third-party opinions or comments posted on a social network to be communications of the broker-dealer or the representative for purposes of Rule 2210.
But if a rep “likes” or shares favorable comments, he or she will be seen as having adopted them. These client posts would then be subject to the communications rules, including the prohibition on misleading or incomplete statements or claims, the testimonial requirements, and the supervision and recordkeeping rules.
