Broker-dealers, RIAs, investment banks, and other financial institutions operating in the digital age must balance multiple competing interests in their marketing operations. The instantaneous nature of social media and websites places pressure on speed and efficiency, while marketers can’t forget their obligations to SEC and FINRA rules regarding official communications.
While marketing professionals are not the ones ultimately responsible for compliance, they do own internal marketing workflows. To that end, this guide clarifies certain SEC and FINRA expectations to help your marketing team create, publish, and obtain approval faster.
How SEC & FINRA Marketing Compliance Works in Real Life
From a high-level view, (and in a perfect world) the marketing and compliance process for highly-regulated industries typically follows these general steps:
- Step #1 - Marketing creates content for the website, social media, or ads.
- Step #2 - Marketing sends content to the compliance team for review & approval.*
- Step #3 - Compliance reviews & provides feedback or approval on the content.
- Step #4 - Marketing publishes the content.
- Step #5 - Compliance verifies the published content is as approved.
- Step #6 - Marketing or compliance has to retain proof of the approval chain for the content, including the after-publishing verification from compliance.
- Step #7 - Marketing monitors the content, updating the compliance team as needed.
*Unfortunately, it doesn’t always happen this way. It should—but it often doesn’t. Marketing teams, unaware of compliance obligations or unclear on the specifics of SEC or FINRA regulations, may neglect to ask for approval for what they may consider small changes on the website, or innocuous posts, re-shares, or comments.
As you can imagine, friction between marketers and compliance professionals is not uncommon.
These teams have two very different objectives: Marketing is trying to create and publish content that generates buzz and business, as quickly and efficiently as possible; Compliance is trying to make sure the company is adhering to very strict recordkeeping and monitoring rules to avoid major fines and sanctions.
Marketing moves fast but compliance needs to be meticulous, which requires more time and consideration.
Rejection of content for seemingly unclear reasons is often one source of friction. Having to wait for approvals or having a last minute review initiated by compliance can be frustratingly slow for marketing professionals who are beholden to their own performance KPIs that may depend on launching campaigns that have been sitting with compliance waiting for approval.
The process can be trying for all involved. However, while the approval process might seem slow, the costs of non-compliance can be far greater than the costs of launching a campaign a little late.
A better understanding of the obligations SEC and FINRA place on marketing content can smooth out much of this friction.
The Basics: How SEC and FINRA Regulate Marketing Content
For some context on SEC and FINRA marketing compliance rules, a glimpse into each entity’s roles in the financial sector can be helpful. The SEC was primarily created as a response to the Great Depression and put forth regulations to protect investors and consumers. It has a broad purview relative to FINRA, which generally deals with broker-dealers. FINRA also helps enforce many of the SEC’s rules and regulations.
SEC and FINRA regulators follow a modified version of the Five Ws of journalism when auditing financial companies for compliance. When it comes to content that’s considered official business communications, they care about:
- What was published,
- When the content was published, modified, or deleted,
- What, exactly, was changed or deleted during modifications,
- Who approved the content, and
- Which evidence backs up the company’s claims.
Key Rules Marketers Need to Know
Several SEC and FINRA rules provide greater detail on the responsibilities of marketing departments for broker-dealers and other financial institutions.
SEC Marketing Rule for Investment Advisers
The 2022 SEC Marketing Rule, or the Investment Advisers Act Rule 206(4)-1, implements a principles-based system to guide marketers and compliance professionals when posting online content, among other new regulations.
While it removed prohibitions on certain content (such as client testimonies), it also broadened the definition of “advertisements” to include nearly every type of digital correspondence. Brokers and other investment advisers must now be mindful every time one of their social media channels or chat technologies sends out advertisements through any medium.
SEC Rule 17a-3
This rule mandates that investment advisers keep exhaustive records related to business operations. The records must be accurate and timely. They include, among other things, all communications between the adviser and its clients.
This places the onus on marketers to create and maintain defensible records of content sent out through social media channels or anything published on their website.
SEC Rule 17a-4
Building on Rule 17a-3, Rule 17a-4 lays out the retention periods for records (3–6 years in most cases) and mandates that records be immediately available for inspections and audits for those years.
It also goes into specifics on the formats that records should be saved in, namely WORM (write once, read many), as WORM-stored records are tamper-proof.
FINRA Rule 2210
One of the marketing-related FINRA rules broker-dealers should be aware of is Rule 2210, which places constraints on communications with investors. Broadly, it mandates that content from firms be fair, balanced, and free from misleading or exaggerated claims.
Depending on the type of investor being addressed, broker-dealers may be required to file communications with FINRA before publication. More stringent requirements apply to communications with solo investors and non-professionals, while institutional investors may not enjoy the same protections.
Another important facet of Rule 2210 is the requirement that broker-dealers maintain documented processes for reviewing and retaining communications.
FINRA Rule 4511
FINRA Rule 4511 largely builds upon the rules previously mentioned. It covers archiving rules for broker-dealer “books and records” and establishes a six-year retention period for many types of content, as well as mandating that books and records be maintained in the same formats as SEC Rule 17a-4.
What Counts as a Marketing Record?
So, how do marketing teams determine which pieces of content qualify as records subject to SEC and FINRA rules? The short answer is that nearly everything on advisers’ websites and social media counts as marketing records, as do most email campaigns.
For websites, that includes product and landing pages, downloadable resources, disclosures, drop-down menus, and even style elements and aesthetics. Social media records include posts, comments, replies, shares, endorsements, and profile information (plus updates).
Other digital content that must be retained also includes digital ads and their targeting parameters.
Why Edits, Deletions, and Comments Matter So Much
The transitory nature of social media, where comments and posts can be edited and deleted at a moment’s notice, requires investment firms to have comprehensive archiving tools that continuously capture SEC- and FINRA-relevant content.
Regulators often consider all parts of a firm’s social media strategy, down to individual comments, to be part of the firm’s investment advice to consumers.
These minute details extend to surface-level website edits and changes, including those made by departments other than marketing. Any edit to website or social media content—no matter how small—needs to be documented and retained for compliance’s sake.
Where Compliance Risk Typically Appears in Digital Marketing
A number of seemingly minor revisions in website and social media content can sometimes happen without getting approval from a firm’s compliance department. That can create risk for the entire company and subject it to steep fines from the SEC and FINRA.
For example, the preview link for a Facebook or Instagram post may contain incomplete information that, without context, could qualify as a violation of SEC rules. This might occur when consumers do not receive mandated disclosures along with social media posts. Another instance of compliance risk can occur when marketing teams reuse email marketing campaigns and update performance claims without running them by compliance professionals.
Marketers typically need to move quickly and efficiently, especially when reacting to macro-level market events. That need can interfere with the need for strict compliance, especially without a digital tool that continuously archives every step of the marketing process into legally defensible records.
Why Screenshots, CMS Backups, and Platform Exports Fall Short
Many financial firms, through no fault of their own, put their faith in screenshots and native backups to satisfy SEC and FINRA social media rules. These “solutions,” though cheaper than other options, do not give auditors what they look for when investigating potential violations.
Here’s why these options fall short:
- Screenshots capture only the content that social media and website users see on the page. By themselves, they do not automatically show who took the screenshot, when the screenshot was taken, and whether or not the image has been altered. Those attributes (or lack thereof) make screenshots vulnerable to challenges of authenticity and completeness.
- CMS backups from your website’s internal management system might contain more data than screenshots, but they still lack crucial metadata that show important details about content. Metadata often includes information about authorship, timestamps, post edits, and interactions, among other things. CMS backups are also not built for long-term storage or with compliance requirements in mind. Generally, CMS backups cannot help you locate or produce specific records if necessary, bringing into question their accessibility, which is required for compliance.
- Native social media platform exports, like the two other non-archiving options, have no inherent guarantees that the underlying content has not been edited or altered. These exports are not usually organized in such a way that locating or producing records is possible. Often, they do not present the data in native format or context, making the data difficult to review.
What Compliant Digital Recordkeeping Actually Looks Like in Practice
Is it possible to combine comprehensive web archiving that passes muster in court and makes your professional marketing life easier? With the right tools, absolutely.
Pagefreezer’s website and social media archiving solutions feature:
- Constant, ongoing capture of your firm’s website and social media content.
- An easily searchable database of archived content.
- Full history of edits and deletions.
- Coherent audit trails, including content approval verification workflows.
- Quick, intuitive access to relevant materials in the event of an audit.
How Proper Archiving Helps Marketers Move Faster
Efficiency is a pillar of most successful digital marketing operations in the digital age. Compliance in highly regulated industries such as securities trading does not have to gum up the efforts.
Proper archiving means marketing teams no longer have to spend hours searching through dense data exports and disorganized website backup databases when compliance asks for information. In-house compliance representatives also don’t need to engage in never-ending email threads with marketers about materials they need.
An underrated benefit of proper archiving tools is the increased confidence and efficiency that marketing teams can realize when planning and executing campaigns.
How Pagefreezer Supports Compliant Digital Marketing
Pagefreezer offers automated website and social media archiving tools for marketers working for broker-dealers and other types of investment advisers. Our team understands the myriad compliance angles financial service providers face and that not every employee is (or can be) an SEC or FINRA expert.
With Pagefreezer’s archiving software, marketers can:
- Easily search the entire archive for specific content, track changes over time, and even compare versions side-by-side.
- Track verification and approval of published content, complete with audit trail.
- Rest assured that archived content is saved with all the necessary and relevant metadata needed to survive regulatory scrutiny. Archives will be there WHEN you need them and AS LONG AS the SEC and FINRA say you need them.
- Marketing and compliance personnel view the same archives and have access to the same verification workflows, so nobody gets left in the dark.
Identify Potential Compliance Gaps and Fill Them with Trusted Software
There’s no better time than the present for a top-to-bottom analysis of your company’s compliance readiness. To help you, we’ve created the r SEC and FINRA Digital Communications Compliance Checklist, including worksheets to assess your risk and a cheatsheet for key SEC & FINRA regulations.
For a look into the ways Pagefreezer can optimize compliance workflows and minimize risk, schedule your demo.
