Advisers who text and chat with clients or who send out hyperlinks should take note of FINRA's most recent regulatory guidance.

Advisers must retain text and chat messages with clients as if they were written or email communications. The move is perhaps no surprise, given recent revelations that critical information conveyed via text exchanges can land advisers in as much hot water as it might via any other medium.

FINRA also offered guidance on how broker-dealers can get into trouble when using hyperlinks and other third-party content. Sharing content through hyperlinks will make a firm responsible for the third-party content, unless the third-party site is dynamic, ongoing and not influenced by the firm, FINRA said.

However, the regulator went a step further, clarifying that a firm may not use a link to a third party that the “firm knows or has reason to know contains false or misleading content.” FINRA also offered guidance on the use of native advertising mandating that such content disclose the firm’s name, any relationship and whether mentioned products or services are offered by the firm. FINRA defines native advertising as content that "matches the form and function on the platform on which it appears."

Slideshow
The 10 most significant FINRA and SEC exam priorities
Regulators have revealed what kind of issues advisors must address if faced with a review.

Elsewhere, on social media sites, FINRA will allow unsolicited third-party opinions in the form of posts (e.g. “likes” on Facebook) so long as a registered representative does not subsequently endorse the third-party opinion. FINRA makes clear that the guidance does not change prior rules and does not interpret SEC rules that apply to advisers.

OUR TAKE: Give FINRA credit for its ongoing regulatory guidance that reflects evolving social media and digital content. The guidance on texts, chats and hyperlinks are fairly reasonable. The challenge for compliance officers is to find emerging technologies and systems to capture the emerging content.

Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access

Todd Cipperman

Todd Cipperman

Todd Cipperman is managing principal of Cipperman Compliance Services, a firm that offers a third-party perspective on regulatory compliance.