Why FINRA Regulatory Notice 17-18 Demands Dynamic, Interactive Web Preservation: Part 2

| September 10 2018

As a securities professional, you’re good at shepherding your static communications through the complex maze of laws, rules, and regulations that dictate how you can communicate with investors and what you can—and can’t—tell them. You’ve mastered your advertising and marketing, focused on honest communications with clients, and deployed comprehensive record retention policies—at least, if we’re talking about hard-copy documents and structured database information, including standard correspondence and emails.

But online and social media data can be an entirely different kettle of fish—so much so that for years, the financial industry lagged behind other corporate sectors in adopting social media or establishing online branding initiatives. That digital invisibility doesn’t fly anymore, though, in a world where more than two in three U.S. adults use social media, engaging with a median number of three social platforms apiece. Today, financial firms, just like everyone else, have to have an online presence and a social media persona to compete for investors’ business.

But just because more communications are occurring online doesn’t make them exempt from regulation. FINRA, the Financial Industry Regulatory Authority, clearly states that “Firms must comply with FINRA’s communication rule notwithstanding the medium—social media, email, or print.

So, if you aren’t actively engaged in a comprehensive website preservation program, capturing dynamic, interactive online and social media content, you’re falling short on compliance. Over the past couple of years, FINRA has been updating its guidance for online communications and social media, ensuring that firms understand their obligations and outlining best practices.

This post is the second in our three-part FINRA series, explaining how FINRA’s new regulations necessitate the development of a robust web capture protocol—and how Hanzo can help. In Part 1, we introduced FINRA Regulatory Notice 17-18, Social Media and Digital Communications, and explained its treatment of interactive web content. This post, Part 2, dives deeper into Regulatory Notice 17-18, discussing some of its specific guidance and demonstrating how dynamic web capture can facilitate compliance. Finally, in post three, we’ll move on to the more recent Regulatory Notice 18-15, Heightened Supervision, and discuss how online content—particularly social media content—can help firms both identify and supervise individuals with concerning histories.

How Web Capture Can Help Satisfy Regulatory Notice 17-18

In Part 1, we sketched the broad outlines of Regulatory Notice 17-18, Social Media and Digital Communications, explaining how it focuses on interactive rather than static content from business rather than personal accounts. Let’s examine a few of the specific requirements of Regulatory Notice 17-18 and discuss how various web capture tools help—or hinder—compliance.

Social Media Likes, Comments, and Third-Party Content

Regulatory Notice 17-18 addresses a common concern about third-party comments on or “likes” of posts or content: are these positive remarks testimonials that require disclosures? So long as those remarks weren’t solicited in any way, FINRA clarified that these communications aren’t advertising and don’t require disclosure—unless the firm interacts with the commenter. Simply “liking” such a comment, or sharing it, or commenting on it to thank or encourage the writer, can all create an adoption whereby the post does become an official communication, demanding a disclosure statement. Particularly on platforms like LinkedIn, where endorsements and recommendations are encouraged, many firms prohibit such third-party interaction. Regulatory Notice 17-18 clarifies that much like Facebook likes, representatives can passively allow satisfied customers to create these endorsements, but they can’t request or solicit such commentary without being deemed to have adopted it.

Additionally, firms must monitor any third-party content posted in their own social media channels to detect and resolve potential complaints and other communications. And while third-party posts aren’t necessarily subject to FINRA’s advertising rules, a firm can easily adopt those posts or become entangled with them.

The key for capturing this content, then, is generating an interactive archive. A reviewer must be able to see that any “likes” or comments on a post originated from people not associated with the firm. Native-format web preservation allows fully clickable links, so that every positive third-party interaction and every potential adoption or entanglement can be fully investigated from the archived page.

Linked Pages and Third-Party Sites

What about sharing or linking to specific content, such as an article, on a third-party site? Is that linked page considered a firm communication?

Generally speaking, yes. Regulatory Notice 17-18 notes that “By sharing or linking to specific content, the firm has adopted the content,” requiring compliance with the standards for any other firm communications. Links to third-party sites with false or misleading content are expressly forbidden, of course.

But it’s a rare page that doesn’t itself include other links to more content. Is a firm responsible for the content of all those linked pages?

Fortunately, that answer is generally no, as long as the firm doesn’t have influence or control over the internal linked pages. But here, again, firms can adopt or become entangled with third-party sites such that their content does become subject to the requirements of other communications.

This is where web preservation demands multiple “hops” across links and thorough quality assurance. Web capture that only preserves the firm’s own pages, and not the associated linked pages, fails to meet FINRA’s requirements for retention of adopted content on a third-party site. By the same token, capturing the next level of links can demonstrate that a firm has neither influenced nor adopted that content.

Interactive and Real-Time Disclosures

Where testimonial disclosures are mandated, how do you provide those? Regulatory Notice 17-18 allows for real-time disclosures “provided in the interactive electronic communication itself.” These adjacent disclosures that appear at the right time are more useful to customers, and they’re now possible through interactive applications and websites.

But static-image or PDF web capture might not reveal that a firm made all required disclosures. Those interactive warnings aren’t visible on screen unless and until the customer accesses the testimonial content demanding the disclosure—which a static capture method may miss.

Again, the key to success is dynamic, interactive web preservation. With native-format archives, a reviewer can interact with a site in every possible way and can see, in real time, every disclosure that is thereby triggered—proving a firm’s compliance.

How Hanzo Can Help With Dynamic, Interactive Web and Social Media Archives

The safest course of action would obviously be to eliminate all social media or to lock down all social media communications. But in this digital age, where 69 percent of U.S. adults use social media, a complete lack of social media presence spells instant obsolescence. Companies that are invisible on social media struggle to compete and lack an accessible means to build trust among current and potential customers.

The upshot of FINRA’s Regulatory Notice 17-18 is that all of your communications—in whatever form of media, and created from whatever device—that relate to the firm’s business must be retained for a predetermined period and may be subject to rules about advertising, disclosures, and honest, fair, forthright communications.

What firms need, then, is a record-capture system that allows full preservation of the dynamic, interactive online content on today’s websites and social media platforms. Firms need a way to show that they didn’t adopt or entangle themselves with unsolicited social media testimonials, link to improper third-party sites, or fail to make required disclosures.

It takes a fully navigable web capture method to satisfy all these criteria. That’s what Hanzo offers.

If you’re not confident that your current online capture method is a future-proof, consistent, reliable means of collecting interactive, multi-link content, give us a call today.

Request a free demo


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