By Ashley Lau
June 19 (Reuters) - Wall Street's Financial Industry
Regulatory Authority is looking at how brokerage firms supervise
their use of communication outlets such as Facebook,
Twitter and LinkedIn, the industry-funded regulator
FINRA, which conducts periodic "sweeps," or targeted checks
on Wall Street brokerages, sent out letters to firms earlier
this month requesting information about their use and monitoring
of social media communications for the companies and individual
The letter, which FINRA posted to its website on Monday,
included requests for information such as how firms monitor
whether their use of social media complies with industry rules.
FINRA also asked for specific data such as the URLs for each
social media site used by firms and the identity of all
individuals who post or update content of those sites.
"Everyone is looking at social media these days," said
Francis Curran, a New York-based lawyer with McCormick & O'Brien
LLP, adding that FINRA's issuance of the letter is reflective of
a broader industry interest in the use of social media.
Firms use social media for purposes such as marketing,
communications and client outreach, but they have to be careful
not to breach rules concerning advising and making
recommendations for clients.
FINRA published an initial social media regulatory notice in
January 2010, providing guidance on the industry's use of blogs
and social media networking sites, "so it makes sense to
incorporate social media reviews into our routine surveillance,"
FINRA spokesman George Smaragdis said.
In its letter, FINRA also requested a list of the firms' top
20 producing advisers who used social media for business
purposes to interact with clients between Feb. 4 through May 4,
including the dollar amount of sales made and commissions earned
during that period.
The Wall Street watchdog regularly issues "targeted
examination letters" to gather information about the industry's
response to certain regulations. The number of firms included in
the sweeps can vary from a handful to dozens.
FINRA did not disclose the number of firms to which the
letters were sent.
"They want to be sure the representatives and firms are
complying with various communications," Curran said. "You really
have firms running the gamut, where they absolutely don't want
registered representatives doing anything on Twitter versus
other firms that are trying to embrace the communication without
creating problems for FINRA or the SEC."