Communications with the Public

FINRA’s communication rules—including FINRA Rules 2210 (Communications with the Public) and 2220 (Options Communications)—are based on the principles of ensuring that member communications are fair and balanced, and that investors do not receive misleading information. Additionally, MSRB Rule G-21 (Advertising by Brokers, Dealers or Municipal Securities Dealers) contains similar content standards relating to municipal securities or concerning the facilities, services or skills of any municipal dealer.

FINRA Rule 2210 defines three categories of written communications—correspondence, retail communications or institutional communications—and sets principles-based content standards that are designed to apply to evolving communications technology and practices. FINRA’s Advertising Regulation Department reviews communications firms submit either voluntarily or as required by FINRA Rule 2210. New firms are required to file all widely disseminated retail communications with FINRA’s Advertising Regulation Department during their first year of membership, and all firms are subject to filing requirements for specified retail communications depending on their content.

FINRA Rule 2220 (Options Communications) governs firms’ communications with the public concerning options.

Findings

• Inadequate Supervision of Firms’ Social Media Influencers and Failure to Retain Records:
  • Not establishing, maintaining and enforcing a system, including WSPs, reasonably designed to supervise communications disseminated on the firm’s behalf by influencers.
  • Not reviewing and approving influencers’ static content on behalf of the firm prior to the influencer posting on social media platforms.
  • Not reviewing or supervising influencer communications on the firm’s behalf posted in online interactive electronic forums in the same manner as required for supervising and reviewing firm correspondence.
  • Not retaining retail communications influencers post on the firm’s behalf.
• False, Misleading, Inaccurate or Unbalanced Information in Mobile Apps:
  • Failing to disclose or inaccurately disclosing the risk of loss associated with certain options transactions.
  • Distributing false or misleading promotions through social media and “push” notifications or “nudges” on mobile apps that made promissory claims or omitted material information.
  • Failing to fully explain the products or services being offered.
  • Failing to clearly and prominently disclose risks, where required by a specific rule or needed to balance promotional content, particularly claims associated with complex products and strategies such as options trading, the use of margin and crypto assets.
• Inadequate Reviews: Reviewing electronic communications without selecting adequate samples or using targeted key word searches; and failure to review electronic communications in non-English languages in which the member conducts business

Effective Practices 

• Procedures for Mobile Apps: Maintaining and implementing supervisory procedures for mobile apps that, for example, verify the accuracy of information and data displayed to customers.
• Reasonably Designed Procedures for Digital Communications: Establishing, maintaining and enforcing reasonably designed procedures for supervision of digital communication channels, including:
  • Monitoring of New Tools and Features: Monitoring new communication channels, apps and features available to associated persons and customers;
  • Defining and Enforcing Prohibited Activity: Clearly defining permissible and prohibited digital communication channels, tools and features, and blocking those prohibited channels, tools and features that prevent firms from complying with their supervision and recordkeeping requirements;
  • Supervision: Implementing supervisory review procedures tailored to each digital channel, tool or feature;
  • Video Content Protocols: Developing WSPs and controls for live-streamed public appearances, scripted presentations or video blogs;
  • Training: Implementing mandatory training programs prior to providing access to firm-approved digital channels, including expectations for business and personal digital communications and guidance for using all permitted features of each channel; and
  • Disciplinary Action: Temporarily suspending or permanently blocking from certain digital channels or features those registered representatives who did not comply with the policies and requiring them to take additional digital communications training before resuming use.
  • GenAI:
    • When using GenAI to generate or otherwise assist in creating communications to customers, ensuring that these communications comply with applicable federal securities laws and regulations and FINRA rules.
    • When using GenAI to create or otherwise assist in creating chatbot communications that are used with investors, ensuring the appropriate supervision and retention of those communications, and retention of those chat sessions, in accordance with applicable securities laws and regulations and FINRA rules.
    • Ensuring that retail communications that mention AI tools or AI services (e.g., portfolio construction or products that rely on AI management) accurately describe how these offerings incorporate AI technology and balance the discussion of benefits with appropriate discussion of risks.¹
• Communications Promoting Securities Lending Programs: Ensuring that communications that promote or recommend income sharing programs to retail investors (e.g., fully paid securities lending programs) accurately and clearly disclose the terms and conditions of the program, including any fees customers would receive.