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The paper aims to explain the new Financial Industry Regulatory Authority (FINRA) rules governing communications with the public approved by the Securities and Exchange Commission (SEC) on March 29, 2012.

The following are explained: categories of communication, pre‐use approval and record‐keeping requirements, filing requirements, content standards, use of investment company rankings in retail communications, requirements for the use of bond mutual fund volatility ratings, requirements for the use of investment analysis tools, communication with the public regarding securities futures, communication with the public about collateralized mortgage obligations, and the implementation date for the rules.

While the new FINRA rules are based on the current provisions of the NASD Rules and Interpretive Materials they replace, there are some notable changes with regard to the communication categories, public appearances, and the approval, review and recordkeeping requirements.

Practical guidance is provided from experienced securities lawyers.

The purpose of this paper is to provide selected Financial Industry Regulatory Authority (FINRA) Regulatory Notices and Disciplinary Actions issued in June, July, and August 2012.

The paper provides FINRA Regulatory Notice 12‐29, Communications with the Public, and Notice 12‐38, Short Interest Reporting.

Notice 12‐29: the SEC has approved FINRA's proposed rule changes to adopt a new set of communication rules that become effective February 4, 2013. They address communications in three categories: institutional communication, retail communication, and correspondence. Among other things, the rules cover approval, review and recordkeeping requirements; content standards; and guidelines for public appearances. Notice 12‐38: the SEC approved amendments to FINRA Rule 4560 to codify the requirement that member firms report only “gross” short interest existing in each proprietary and customer account (rather than net positions across accounts) and clarify that member firms' short interest reports must reflect only those short interest positions that settled.

These FINRA notices are selected to provide a useful indication of regulatory trends.

The purpose of this paper is to provide selected Financial Industry Regulatory Authority (FINRA) regulatory notices and disciplinary actions issued in July and August 2011.

The paper provides Regulatory Notice 11‐31, July 2011, Credit Default Swaps: Interim Pilot Program on Margin Requirements for Credit Default Swaps; Notice 11‐37, July 2011, Trading Halts Due To Extraordinary Market Volatility: Trading Pause Rule Expanded to All NMS Stocks; Notice 11‐38, August 2011, Application of the SEC's Financial Responsibility Rules in Response to the Downgrade of US Long‐term Credit Rating by Standard & Poor's; Notice 11‐39, August 2011, Social Media Websites and the Use of Personal Devices for Business Communications: Guidance on Social Networking Websites and Business Communications; and selected FINRA disciplinary actions in July and August 2011.

Notice 11‐31: FINRA has extended the implementation of Rule 4240 so that it will expire on January 17, 2012; the Rule established an interim pilot program with respect to margin requirements for certain transactions in credit default swaps. Notice 11‐37: Beginning August 8, 2011, the trading pause pilot rule – currently applicable only to securities included in the S&P 500® Index, the Russell 1000® Index and a list of selected exchange‐traded products (ETPs) – will be expanded to include all National Market System (NMS) stocks. Notice 11‐38: FINRA staff has confirmed with the staff of the SEC that this ratings action by Standard & Poor's does not alter the net capital treatment of these government securities under SEA Rule 15c3‐1(c)(2)(vi)(A) and does not affect the definition of “qualified security” under SEA Rule 15c3‐3(a)(6). Notice 11‐39: Responds to questions regarding the application of Regulatory Notice 10‐06, January 2010, providing guidance on the application of FINRA rules governing communications with the public to social media sites and reminding firms of the recordkeeping, suitability, supervision and content requirements for such communications.

These are direct excerpts designed to provide a useful digest for the reader and an indication of regulatory trends.

The New York Stock Exchange, Inc. (NYSE) and the National Association of Securities Dealers, Inc. (NASD) have proposed changes to their rules regarding the supervision and review of its member firms' supervision of electronic communications. The rule changes provide brokerage firms with more flexibility by removing the requirement that firms review each and every item of correspondence between brokers and their clients and, instead, require that firms establish reasonable procedures for review of communications with the public. The proposed changes will allow brokerage firms to take advantage of the many benefits and efficiencies offered by electronic mail and Internet communication. The paper offers a practitioner's guide on the latest rulings regarding electronic communications from the Securities and Exchange Commission (SEC), the NASD, the NYSE, the North American Securities Administrators Association and foreign regulators. This outline covers virtually every Release issued on the Internet in the USA and abroad.

In April 2017, FINRA issued a regulatory notice addressing the use of social media and digital communications by broker-dealers. The notice expanded on previous FINRA guidance on these topics. This article provides clarity regarding how social media and digital communications fit within the requirements of various FINRA rules and provides guidance to firms and their registered representatives.

The principal topics addressed by FINRA’s regulatory notice are: (a) text messaging, (b) personal versus business communications, (c) third-party content and hyperlinks, (d) native advertising, (e) testimonials and endorsements and (f) links to BrokerCheck. This article presents an overview of each of these topics, respectively.

Under recordkeeping requirements, firms must ensure that they are able to retain communications made through text messaging and chat services. Business communications, which relate to the products or services of the firm, are subject to filing and content requirements, while personal communications are not. Under certain circumstances, third-party posts on social media sites established by the member and testimonials may be attributable to the firm. Native advertising, while permissible, must comply with content requirements. Firm-created electronic applications do not have to provide a link to BrokerCheck.

Firms and their registered representatives will gain a better understanding of what is permissible pursuant to FINRA and SEC rules as they communicate digitally and via social media.

To review guidance issued in April 2014 by the staff of the USA Securities and Exchange Commission (SEC) that clarifies how participants in regulated securities offerings, business combinations, proxy contests, and tender offers may transmit required cautionary statements and legends to the securities marketplace via social media technology platforms whose space limitations preclude display of the full text of the required statements.

Examines the new SEC staff interpretative guidance in light of the tension between the disclosure requirements of the SEC’s communications rules and the characteristics of some social media platforms that do not permit compliance with the SEC rules in the same manner as traditional paper-based disclosure vehicles.

The staff’s new guidance permits issuers and other parties to comply with the communications rules by using in their social media transmissions an active hyperlink that connects to the text of the required statements, thereby dispelling the legal uncertainty about the hyperlinking approach that has discouraged parties from using some social media outlets to disseminate information about their transactions. The article notes that the staff’s conditions place important limitations on the use of hyperlinks, especially in connection with the use of popular social media platforms such as LinkedIn, Facebook, and others that do not impose a cap on the number of characters or amount of text that may be included in a communication, and fails to address the permissibility of other approaches to overcoming the space limitations of some platforms.

Provides expert guidance from experienced securities lawyers.

To summarize recent FINRA guidance on social media and digital communications published in Regulatory Notice 17-18.

The intention was to provide a brief summary of the recent FINRA guidance on social media and digital communications published in Regulatory Notice 17-18 along with previous guidance in Regulatory Notices 10-06 and 11-39.

The new guidance focuses on a number of areas of digital communications including text messaging, personal communications, hyperlinks and sharing, native advertising, testimonials and endorsements, correction of third-party content and BrokerCheck links.

Firms should review this new guidance alongside existing FINRA guidance and their current social media and digital communications practices. Where firms observe deficiencies in their existing practices, adjustments should be made before they find themselves the subject of a FINRA investigation, examination or enforcement action.

Practical explanation by experienced financial services lawyers.

This qualitative study investigated how small group communication influences the development of shared mental models in a committee of public librarians addressing a problem-solving task. It examines the influence of communication themes, functions, roles, and rules on the group's development of shared mental models about the task and about team interaction. Data were collected over the course of a year from group meetings, email messages, group documents, and participant interviews and then analyzed using existing coding schemes and qualitative coding techniques. The findings indicate that within the group there was a strong superficial convergence around the task mental model and the team interaction mental model but a weaker convergence at a deeper level. Analysis of the group communication data shows that the group focused discussion on understanding the problem and identifying tasks, enacting group roles and rules that facilitated sharing information. The functions of their messages focused on task communication. The findings suggest that, in this group, communication themes most heavily influenced the development of a shared mental model about the task, while communication roles, rules, and functions were more influential toward the development of a shared mental model about team interaction. Implications for practice include adopting intentional tactics for surfacing mental models at various points in the group life and anchoring the emerging model within the collective cognition of the group through devices such as narratives, objects, or documentary materials.

Missing in most of the research on selling has been an examination of the process from the point of view of the customer. When satisfaction in selling has been considered, researchers have focused on the satisfaction of the salesperson with his job and/or the impact of this job satisfaction on performance (e.g. Bluen, Barling & Burns, 1990; Churchill, Ford & Walker, 1979; Pruden & Peterson, 1971). To concentrate on salesperson performance while neglecting customers is to ignore the most important half of the relationship between buyers and sellers and entirely disregards the marketing concept and the streams of research in customer satisfaction. This research takes a different approach and examines customers’ satisfaction with salespeople.

To explain the significance of a recently issued interpretive letter in which FINRA staff agreed to permit the use of pre-inception index performance data by passively managed, registered open-end investment companies.

FINRA recently issued an interpretive letter extending previously issued guidance by permitting passively managed open-end registered investment companies including separately-managed series of a business trust to use pre-inception index performance data in Institutional Communications.

The 2019 Letter is an important shift in how FINRA staff views PIP data in Institutional Communications by acknowledging that passively managed open-end funds should be treated in a similar manner as passively managed exchange-traded funds. This shift will be a welcome development for FINRA member firms wishing to include PIP data in marketing materials for the passively managed open-end funds they distribute.

Practical guidance from experienced investment management and broker-dealer lawyers.