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FINRA relaxes social media controls
Wednesday, 18 January 2012 12:25pm

Australian financial planners may see some of their social media compliance issues lessen if Australian regulators follow FINRA's lead, after the US regulator proposed changes to its rulings to allow planners to communicate through social media without having to file the communication.

The proposed new compliance rules were for an exclusion to apply for "retail communications that are posted on online interactive electronic forums," said the Financial Industry Regulatory Authority (FINRA).

Defining retail communication as any written (including electronic) communication made available to more than 25 retail investors within any 30 calendar-day period, FINRA was also adamant that the exemption would not apply for institutional investors who receive the communication.

It should also be noted that the exemption would not apply to any filing requirement that may arise under either federal law or SEC Rules and that the issue of content would also be important.

If the proposed change was approved, US planners may now be able to communicate freely on social media to large numbers of retail clients and non-clients about work issues without filing all activities, eliminating a major deterrent for advisers.

In practical terms, social media forums such as Facebook, Twitter and blogs could potentially be a free space for advisers to communicate with clients and non-clients without fear of a compliance nightmare.

However, US advice firms were encouraged to install their own compliance practices for their advisers to follow to ensure no breaches of conduct.

The Australian Securities and Investments Commission (ASIC) has previously cautioned financial services professionals they must be vigilant with their web presence.

"The online sphere gives market participants a new space to interact. Using the internet and a range of social media applications, ASIC will be vigilant in monitoring the many conversations that are happening in the market to ensure fair market trading practices," an ASIC spokesperson told Financial Standard

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