With this week’s release of FINRA’s guidance on social media sites for securities traders, I thought it would be interesting to look at how the futures trading regulatory body is dealing with the issues. It turns out that the National Futures Association recently amended its rules to address social media and released new interpretive notices (.pdf).
As with FINRA, the NFA took a platform neutral position. On-line communications are subject to the same standards as other types of communications.
All audio or video advertisement, regardless of whether its on the radio, television, the internet or any media accessible by the public is subject to the rule. That means it must be reviewed by the NFA before it is published if it contains a specific trading recommendation or claims of past profits.
Any electronic content that can be viewed by the general public, or even by a more closed community that includes current and potential customers, can be promotional material. That makes it subject to the requirements of NFA Compliance Rules 2-29, 2-36, or 2-39.
Members should have policies regarding employee conduct. These policies could require employees to notify the employer if they participate in any on-line trading or financial communities and provide screen names so that the employer can monitor employees’ posts periodically. Alternatively, the policy could simply prohibit participation in such communities. The Member must, of course, take reasonable steps to enforce whatever policies it adopts.
The notice also points out that you need to be careful about your hyperlinks. You could be held accountable for linking to third party content that is misleading.
- National Futures Association: On-line Social Networking Groups – Proposed Amendments to NFA’s Compliance Rule 2-29(h) and Adoption of Interpretive Notice (.pdf)
- Podcast from NFA on Use and Supervision of Online Social Networking Communications
- NFA Provides Social Networking Compliance Guidance on the Hedge Fund Law Blog
- FINRA Issues Guidance on Social Networking Sites– previous post