FINRA Sweeps BDs on Use of Social Media Influencers, Referral Programs

By Melanie Waddell

News September 17, 2021 at 01:10 PM

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The Financial Industry Regulatory Authority is conducting an exam sweep on broker-dealer practices related to the acquisition of customers through social media channels.

The sweep also probes firms on how they "manage their obligations related to information collected from those customers and other individuals that may provide data to firms."

FINRA CEO Robert Cook said on July 22 that a sweep related to "finfluencers" was coming.

The sweep would focus on "how firms supervise activities and communications related to paid social media influencers," he said at the time.

The broker-dealer self-regulator is looking for communications via any website or application that enables users to create and share content or participate in social networking, including TikTok, Facebook, Instagram, YouTube, Twitter, Stocktwits, Reddit and Twitch.

FINRA also wants firms to weigh in on their written and supervisory compliance with the Securities and Exchange Commission's Regulation S-P, Privacy of Consumer Financial Information and Safeguarding Personal Information.

Firms are being asked to include, for instance, a description of the firm's supervisory system concerning compliance with Reg S-P with regard to the collection of cookies obtained from customers, or individuals who provide NPI but are not onboarded as customers.

FINRA also wants firms to provide copies of any firm social media postings, website content, emails, or other communications designed to recruit individuals, including firm customers, to participate in any referral program.

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