FINRA & Social Media Compliance for Financial Companies

Last Updated December 2023

Understanding FINRA and the Impact of Social Media on Financial Companies

Overview of FINRA

Financial Industry Regulatory Authority (FINRA) is a self-regulatory organization (SRO) that oversees and regulates brokerage firms and their registered representatives, protecting investors and ensuring fair and ethical financial markets. FINRA’s main objective is to promote market integrity and investor confidence through effective and efficient regulation of the securities industry.

What is FINRA

FINRA was established in 2007 when the regulatory functions of the Naonal Association of Securities Dealers (NASD) merged with the enforcement and arbitration divisions of the New York Stock Exchange (NYSE). As the largest independent regulator for all securities firms doing business in the United States, FINRA acts as a watchdog to ensure compliance with industry rules and regulations.

Role of FINRA in the Financial Industry

FINRA plays a vital role in maintaining the integrity and stability of the financial industry. It enforces high ethical standards, supervises broker-dealer activities, conducts examinations, and identifies and addresses potential risks. The organization also provides investor education and protection, overseeing the handling of customer complaints and resolving disputes through arbitration or mediation.

Social Media & It’s Impact

Social media has revolutionized communication in the digital age. It has transformed the way people interact, share information, and access news. With the rise of platforms like Facebook, Twitter, LinkedIn, and Instagram, social media has become an integral part of our daily lives.
How Social Media has Transformed Communication
Social media platforms have made it easier for individuals to connect with others across the globe, facilitating instant communication and fostering communities. It has given a voice to the masses, allowing people to express their opinions, share experiences, and engage in conversations on various topics.
Additionally, social media has become a powerful tool for disseminating information quickly, allowing news to spread rapidly and without geographical boundaries. It has democratized the media landscape, providing individuals and organizations with a platform to share news, stories, and insights directly with their audience.
Growing Importance of Social Media for Businesses
Businesses have recognized the immense potential that social media holds in reaching and engaging with their target audience. With billions of users worldwide, platforms like Facebook and Instagram offer businesses a cost-effective way to promote their products and services, build brand awareness, and attract potential customers.
Moreover, social media provides businesses with valuable consumer insights, allowing them to analyze data, understand customer preferences, and tailor their marketing strategies accordingly. It enables brands to establish a direct line of communication with their customers, fostering brand loyalty and enhancing customer experience.

FINRA Regulations on Social Media

Given the widespread use and influence of social media, FINRA has established guidelines and regulations to ensure that financial companies and their representatives adhere to certain standards while utilizing these platforms. These regulations aim to protect investors, prevent misleading information, and maintain the integrity and reputation of the financial industry.
FINRA’s regulations on social media cover various aspects, including recordkeeping, supervision, content standards, and communications with the public. The organization requires financial companies to maintain records of all business-related communications made through social media platforms and ensure that adequate supervision and surveillance measures are in place.
Furthermore, financial companies must comply with content standards by ensuring that their social media communications are fair, balanced, and not misleading. They are also obligated to disclose their role as a financial professional and any potential conflicts of interest. Additionally, FINRA requires financial companies to implement policies and procedures to monitor and mitigate reputational risks associated with social media usage.
In conclusion, social media has become an integral part of our personal and professional lives. For financial companies, adhering to FINRA’s regulations is crucial to maintain compliance, protect investors, and preserve the reputation of the industry. By understanding the impact of social media and following best practices, financial companies can leverage these platforms to enhance their brand, engage with customers, and build meaningful relationships in the digital age.

Key Regulations Imposed on Financial Companies by FINRA


FINRA, the Financial Industry Regulatory Authority, is a non-governmental organization that serves as a self-regulatory body for the financial industry. It sets rules and regulations for financial companies to ensure their compliance and protect investors. Compliance with FINRA regulations is crucial for financial companies to maintain their reputation and avoid legal repercussions. Here are some key regulations imposed by FINRA on financial companies:

FINRA Rule 2210

This rule governs how financial firms communicate with the public, including through social media. It requires that all communications be fair, balanced, and not misleading. Firms must also retain records of their social media communications for inspection.

FINRA Rule 4512

Customer Account Information: This rule relates to maintaining accurate customer information. When using social media, firms must ensure that customer account information is up-to-date and accurate in any communications.

Regulatory Notice 11-39

Guidance on Social Networking Websites and Business Communications. This notice provides specific guidance on using social networking websites and other forms of online business communications.

Securities Exchange Act

Regulations and rules set forth by the U.S. Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934. These requirements are designed to ensure that brokers and dealers in the securities industry maintain accurate and comprehensive records of their activities, transactions, and communications.

Rule 17a-3 and Rule 17a-4:

While not specific to social media, these rules address record-keeping requirements for financial firms. It’s important for firms to maintain records of social media communications in accordance with these rules.