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Finra Incorporates Social Media in New Communications Rules

Posted by Jack Duval

Nov 22, 2012 2:24:17 AM

Finra Notice to Members 12-29, announced the SEC approval of far reaching updates to previous NASD and NYSE communications rules.  (NTM 12-29)  The new rules will be numbered 2210 and 2212-16 and will be collectively referred to as the "Communication Rules".  These new rules will incorporate and replace the following rules:


  • Finra rules: 2210, 2211, and Interpretive Memos 2210-1, 2210-3 through 2210-8

  • NYSE Rule 472


The new rules go into effect February 4, 2013.

Of interest are the following:


  • A reduction in the number of defined types of communication from six to three;

  • The formal incorporation of social media as a type of retail communication under 2210(c)(7)(m).  (The previous guidance was under NTM 10-06, Social Media Web Sites.)


Here's an extract on the three categories:
Communication Categories

The rule change reduces the number of current communication categories from six to three, as follows:


  • Institutional communication includes written (including electronic) communications that are distributed or made available only to institutional investors, but does not include a firm’s internal communications. “Institutional investor” generally has the same definition as under NASD Rule 2211(a)(3).4

  • Retail communication includes any written (including electronic) communication that is distributed or made available to more than 25 retail investors within any 30 calendar-day period. “Retail investor” includes any person other than an institutional investor, regardless of whether the person has an account with the firm.

  • Correspondence includes any written (including electronic) communication that is distributed or made available to 25 or fewer retail investors within any 30 calendar-day period.


Communications that currently qualify as advertisements and sales literature generally fall under the definition of “retail communication.” In addition, to the extent that a
firm distributes or makes available a communication that currently qualifies as an independently prepared reprint to more than 25 retail investors within a 30 calendar-day period, the communication also falls under the definition of “retail communication.”

Compliance officers and supervisors will (at a minimum) need to do the following:

  • Update their policies and procedures for review of social media communications;

  • Integrate social media review into their supervisory systems;

  • Create ESI search and retrieval capabilities for social media discovery purposes.

Read More

Topics: 2212-16, FINRA, social media, 2210, Communications Rules, SEC, Compliance

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