A Deep Dive into Communications and Social Media Strategies for Small Firms Thursday, November 10 11:30 a.m. 12:30 p.m.

Transcription

1 A Deep Dive into Communications and Social Media Strategies for Small Firms Thursday, November 10 11:30 a.m. 12:30 p.m. FINRA staff and industry panelists answer questions about how to stay in compliance when communicating through social networks, websites, and mobile devices. Panelists also provide helpful tips for small firms by addressing the underlying principles, recent regulatory developments, and compliance practices regarding social media and digital communications. Moderator: Panelists: Gregory Riviello Director FINRA Advertising Regulation Sheelagh Howett Chief Risk Officer and Director of Audit Committee Cantella & Co., Inc. James Webb Principal and Chief Executive Officer Cape Securities, Inc Financial Industry Regulatory Authority, Inc. All rights reserved. 1

2 A Deep Dive into Communications and Social Media Strategies for Small Firms Panelist Bios: Moderator: Gregory Riviello is a Director in FINRA s Advertising Regulation Department. The department is responsible for the regulation of FINRA member firms communications with the public. His daily responsibilities include supervising the activities of 25 staff devoted to the review of communications routinely filed with the department by FINRA member firms. Other responsibilities include managing and coordinating the recruiting, training and quality control functions of the department. Mr. Riviello has more than 35 years of experience in the securities industry including more than 25 years with the Advertising Regulation Department. He is a graduate of West Chester State University in West Chester, Pennsylvania, and holds an MBA from the University of Maryland. Panelists: Sheelagh Howett is Chief Risk Officer at Cantella & Co., Inc. She is on the Board of Directors and shares leadership responsibility with the President and CEO for overseeing the growth and success of the firm. She focuses on keeping clear and regular communication between business units and compliance within the firm. She strongly believes that risk is an enterprise-wide responsibility and has created a risk-aware culture including an understanding that risk prevention is everyone s job. She continually works to further develop risk-management processes to identify, assess, and respond to the inevitable risks that face our industry. At the same time, she works to improve the efficiency and integration of existing processes into daily routines so they become ingrained in the firm's business. Ms. Howett is an active member of the Greater Boston Chamber of Commerce, the New England Broker/Dealer Investment Advisor Association, and the Women in Pensions Network. Originally from Ireland, Ms. Howett earned a BA in Banking and Finance at University College in Dublin. She holds FINRA Series 7 and 24 licenses. James Webb is Principal and CEO of Cape Securities, Inc., an Independent Securities Firm and has experienced first-hand with the difficulties presented by the current regulatory environment, feeling that member concerns are his concerns. He has spent more than 20 years in the financial services Industry, both as producer and in senior leadership with major companies. With the advantage of speaking to literally thousands of representatives through the years and listening to their ideas on creating an ideal securities business relationship; Mr. Webb created the Cape Family of companies. His vision has been to create an environment that facilitates growth, plugs into a core strategy, and introduces affiliates to new opportunities. Mr. Webb took the helm as Principal and CEO of Cape Securities in 2008, with a goal of building a family of companies that would create a Financial Concierge for each of Cape s representatives and clients alike. Cape Securities has continued to grow exponentially in a broad array of facets, including: The build-out of Cape Investment Advisory, Inc., An SEC-Registered Investment Advisory; and the integration of Cape Insurance Solutions, Inc., an independent Insurance Agency. Through the alliance of these companies, Cape has the necessary tools to provide financial professionals and clients with a broad array of investment services and financial solutions Financial Industry Regulatory Authority, Inc. All rights reserved. 2

3 Small Firm Conference November 9-10, 2016 Phoenix, AZ A Deep Dive into Communications and Social Media Strategies for Small Firms

4 Panelists Moderator Gregory Riviello, Director, FINRA Advertising Regulation Panelists Sheelagh Howett, Chief Risk Officer and Director of Audit Committee, Cantella & Co., Inc. James Webb, Principal and Chief Executive Officer, Cape Securities, Inc. 1

5 To Access Polling Click on the schedule icon on the home screen Choose the A Deep Dive into Communications and Social Media Strategies for Small Firms session Click on the polling icon: 2

6 FINRA Rule 2210: Communications With the Public Overview Types of communications and definitions Retail communication Correspondence Institutional communication Principal approval of retail communications Supervision of correspondence and institutional communications Recordkeeping Filing requirements for retail communications 3

7 FINRA Rule 2210: Communications With the Public Content standards for all communications Must be fair, balanced and complete and not omit material information. False, misleading, promissory, exaggerated or unwarranted statements or claims prohibited. May not predict or project performance (with certain exceptions). Material information may not be in footnotes. Statements must be clear and provide a balanced treatment of risks and potential benefits. Communications must be appropriate for the audience. 4

8 Polling Question #1 Does your firm currently use social media as part of their marketing strategy? A. Yes B. No 5

9 The Reality of Social Media Viewing habits have changed migration from traditional media outlets to social media platforms. Efficient marketing tool. Greater client engagement helps build stronger relationships. Another way to reach existing and potential clients. Firms need to ensure that their representatives talk with their compliance department prior to engaging in any social media activities. 6

10 Social Media Compliance: Core Concepts 7

11 Recordkeeping Responsibilities SEC Rules 17a-3 and 17a-4 and FINRA Rule 4511 apply: Firms must preserve for a period of not less than three years records of communications related to their business as such. Defining business as such Business as such is facts and circumstances analysis based on the content of the communication. It does not depend upon the type of device or technology or whether it s a personal device. Social media and devices must be able to meet record retention requirements. 8

12 Business vs. Personal Use FINRA s guidance does not apply to personal use of social media. Firms need to have procedures addressing business and non-business communications (personal) in social media. Firms must educate their representatives to distinguish between business and non-business communications. 9

13 Supervision: Static vs. Interactive FINRA Rule 2210 establishes different supervisory standards for static versus interactive retail communications. Static: Must be approved prior to use by a registered principal, may be subject to a filing requirement. Interactive: May be supervised flexibly in accordance with firm s written supervisory procedures; not subject to the filing requirements. 10

14 Supervision: Guidance Supervising social media sites and posts. Addressing new social media sites. Should all associated persons be allowed to use social media? Suitability Recommendations Required disclosures 11

15 Polling Question #2 Does your firm s reps and advisors feel they have received adequate compliance training on social media? A. Yes B. No 12

16 Third-Party Posts: Adoption and Entanglement Generally, third-party posts are not subject to FINRA s advertising rules unless the firm has adopted or becomes entangled with the content of an interactive post. Adoption You endorse the third-party post. Entanglement You help develop the third-party post. The recordkeeping requirements apply to third-party content posted in a firm s interactive electronic forum. 13

17 Third-Party Posts: Supervision Procedures and policies Implications of Liking, forwarding and re-tweeting Monitoring third-party posts Customer complaints When is it permissible to delete negative posts? Testimonials 14

18 Hyperlinks Is a firm responsible for the content on a third-party site it links to? General versus specific Hyperlinks within a third-party site Can a firm hyperlink to disclosure? 15

19 Reference Material and Resources FINRA Regulatory Notice 10-06, Guidance on Blogs and Social Networking Web Sites (January 2010). FINRA Regulatory Notice 11-39, Social Media Websites and the Use of Personal Devices for Business Communications (August 2011). FINRA Regulatory Notice 12-29, SEC Approves New Rules Governing Communications With the Public (June 2012). FINRA Rule 2210 Questions and Answers available at 16

20 Polling Question #3 What is the biggest challenge you feel legal and compliance staff face in using social media? A. Keeping up with technology B. Fear of breaking the rules C. Staffing / Resources D. Lack of regulatory guidance E. Recordkeeping F. My Firm does not use it 17