FINRA Publishes New Social Media Influencer Sweep

FINRA published the Update on Sweep: Social Media Influencers, Customer Acquisition and Related Information Protection—a follow-up to the September 2021 targeted exam (sweep) of firms’ practices related to their acquisition of customers through social media channels and their sharing of customers’ usage information with affiliates and non-affiliated third parties. The interim report summarizes selected practices FINRA has observed firms implement to this point in the sweep, which may help firms evaluate whether their practices and supervisory systems are reasonably designed to address risks related to social media influencer and referral programs. The update builds upon FINRA’s ongoing commitment to provide transparency to member firms about our regulatory programs and initiatives, such as sweeps, to help them assess their compliance programs and address areas of concern.
 

FINRA has published Regulatory Notice 23-03 relating to the GASB Accounting Support Fee to fund the Governmental Accounting Standards Board. FINRA will assess and collect a total of $14,403,500 to adequately fund GASB’s annual budget by collecting $3,600,875 from its member firms each calendar quarter beginning in April 2023. The GASB Accounting Support Fee is collected on a quarterly basis from member firms that report trades to the Municipal Securities Rulemaking Board (MSRB).
 

FINRA publishes disciplinary actions to remind registered representatives and firms of specific conduct that violates FINRA rules and may result in disciplinary action.
 

As a reminder, SEC amended Rule 17a-4 on October 12, 2022, to modify the requirements regarding the maintenance and preservation of electronic records, the use of third-party recordkeeping services to hold records, and the prompt production of records (effective and compliance dates: January 3, 2023, and May 3, 2023, respectively). FINRA prepared a chart that summarizes the most significant changes. Additionally, the SEC has prepared responses to Frequently Asked Questions (FAQ).

As a result of the changes to the language of the Third-Party Access Undertaking, firms electing to continue using their current third-party access arrangements to comply with Rule 17a-4(f) must ensure that the third-party files new undertakings including the amended language. These new undertakings must be submitted to FINRA by May 3, 2023. Firms are alerted that if they elect to utilize an electronic recordkeeping system, the amendments require that they submit to FINRA either a Third-Party Access Undertaking or a Designated Executive Officer Undertaking.

FINRA is updating the Interpretations of Financial and Operational Rules to reflect amendments to the text of SEA Rule 17a-4 (Records to be preserved by certain exchange members, brokers and dealers) that the SEC has adopted. The amendments to Rule 17a-4 became effective on January 3, 2023, with a compliance date of May 3, 2023.

Members should note that, effective February 24, 2023, the Interpretations of Financial and Operational Rules on FINRA.org are only available in HTML. The pdf versions of these materials have been retired.

Questions may be directed to Yui Chan at [email protected].
 

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