Section IV: Regulatory Considerations

In addition to the potential benefits and risks and related factors noted above, member firms should also be mindful of the potential implications to their regulatory obligations as they consider whether to use the various social media techniques described in this report. In 2023, FINRA provided an update to its targeted exam of firms’ social media activities, which included various considerations for firms potentially related to regulatory, compliance and reputational risk.⁵³ To the extent that member firms offer or use social media techniques, such as sentiment analysis tools, including those that employ AI, FINRA reminds its member firms that FINRA’s rules are intended to be technology neutral⁵⁴—and the securities laws, more generally, continue to apply, just as they apply when member firms use any other technology or tool. The specific rules applicable to member firms’ use of social media will vary—and could implicate many areas of member firms’ regulatory obligations—but will ultimately depend on how member firms deploy its use.⁵⁵

This report is not intended to provide an exhaustive or cumulative list of all factors or regulatory issues associated with the use of social media and related technologies. Moreover, this report does not create any new legal or regulatory requirements or new interpretations of existing requirements, nor does it relieve firms of any existing obligations under federal securities laws and regulations. Member firms may consider the information in this report when developing new, or modifying existing, practices that are reasonably designed to achieve compliance with relevant regulatory obligations based on the member firm’s size and business model. Member firms should conduct their own risk assessments regarding the potential regulatory implications of their social media activities that pertain to their unique use cases and business models.

FINRA welcomes the opportunity to engage with member firms regarding social media-influenced investing. To the extent member firms find ambiguity in the application of FINRA rules based on their specific use of social media, they may seek interpretive guidance from FINRA by following FINRA’s process for interpretive requests.⁵⁶