FINRA’s Focus on Text and Social Communications Records: Why Investors Should Care
If you’ve ever been frustrated by a financial advisor who insists on returning your texts with emails, phone calls, meeting requests, or even actual…
June 30, 2017 at 09:50 AM
4 minute read
The original version of this story was published on Law.com
If you've ever been frustrated by a financial advisor who insists on returning your texts with emails, phone calls, meeting requests, or even actual paperwork, there's likely a good reason behind their old-fashioned ways. Their firm's Written Supervisory Procedures (WSPs) might prohibit text messaging for business purposes, particularly on personal devices. Such policies are often put in place to protect the consumer, advisors, and the firm, in an attempt to guarantee that all business electronic communications are documented and available for discovery procedures or for regulatory examinations and audits.
Today, the Financial Industry Regulatory Authority (FINRA), the largest non-governmental regulatory body overseeing the securities industry, has stepped up investigations of member firms and advisors that don't have adequate retention and supervision of electronic communications.
Text and social media have become a top priority for FINRA, which recently issued an Examination Priorities Letter stating that “FINRA will review firms' compliance with their supervisory and record-retention obligations with respect to social media and other electronic communications in light of the increasingly important role they play in the securities business. We note that these obligations apply to business communications irrespective of the medium or device used to communicate. “ FINRA's latest guidance for Social Media and Digital Communications enforces the rules, noting:
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