FINRA’s Guide to the Internet

FINRA has published a Guide to the Internet for Registered Representatives. It paints a difficult picture for registered representatives wanting to use Web 2.0 tools.

FINRA breaks internet activity into five main group for purposes or regulatory requirements:

  • Publicly available Web sites (including banner advertisements, blogs and bulletin boards) are considered advertisements.
  • An email or instant message sent to 25 or more prospective retail customers is considered sales literature.
  • An email or instant message is considered correspondence if it is sent to i) a single customer (prospective or existing) ii) to an unlimited number of existing retail customers and/or less than 25 prospective retail customers (firm-wide) within a 30 day period.
  • Password-protected Web sites are considered sales literature.
  • Chat room discussions are considered public appearances.

I am not sure all of this is a particularly useful grouping since many of the characteristics are shared across the groups. For instance how does a chat room differ from comments on a blog. How does an RSS feed differ from an email to 25 or more prospective customers? But FINRA does acknowledge that “a member firm’s obligations to supervise electronic communications are based on the content and audience of the message, rather than the electronic form of the communication.”  [FINRA Regulatory Notice 07-59 (.pdf) on the Supervision of Electronic Communication. ]

Given that many of the Web 2.0 tools are communications with the public, you should look at FINRA Rule 2210 Communications with the Public. The rules are major impediment to the use of Web 2.0

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