
By Jessica Hamby
Subscribe to our original industry insightsSeveral high-profile SEC cases have recently highlighted regulatory interest in digital communications. Panelists at FINRA’s 2023 Annual Conference discussed digital communications, including customer disclosures and marketing, off-channel communications, and the use of financial influencers.
In the past, disclosures have been a dry, often unread addition to account documents. New technology, including Artificial Intelligence, can be used to present disclosures in a more interactive and even fun way to customers. Firms can partner with FINRA to design digital disclosures and marketing materials to ensure compliance. Member firms have an assigned analyst they can contact when they have questions, or to voluntarily file materials for review. The Risk Monitoring Team can also assist with questions in this area. FINRA reminds firms that all communications with the public must be fair, balanced, and not misleading in compliance with FINRA Rule 2210.
For firms using mobile apps, FINRA is looking at customers’ ability to access disclosures after initially agreeing to them. FINRA is also focused on whether the client is clear on exactly what type of account or services they are signing up for when using an app. The 2023 FINRA Exam and Risk Monitoring Report includes more mobile app guidance.
Off-Channel Communications has become a major focus for regulators and FINRA member firms. Conference panelists had several observations about recent cases and investigations that may be useful for creating compliant policies and procedures:
Some firms are partnering with financial influencers as a marketing and communications tool. There are many risks involved but panelists agreed that firms can embrace this type of communication and build guardrails around it to stay compliant. Panelists offered some suggestions for compliance in this area:
Keeping up with new trends in a quickly changing environment is a challenge that everyone in the industry faces. It is helpful to have representatives from Compliance and Legal involved in new innovations or business lines at the beginning of the process. This saves time and frustration for everyone. Firms can have a committee in place to assess new technologies, including risks and opportunities. The committee can have a checklist of what to consider during the review and ask for demos to learn more.
FINRA wants to partner with firms on the front end of new technologies to help ensure compliance and understand how member firms are using them to communicate with customers. Panelists agreed that new technologies can have a positive industry impact and can be embraced in a thoughtful, compliant way.
Oyster’s team of former CCOs and regulators will work with your firm to ensure that your communications policies, supervision and record keeping achieve compliance. Our consultants have the knowledge, experience, and resources to help you prioritize, address and respond to risk with reasonable and practical solutions.
"*" indicates required fields
Download the Capital Markets Services eBook to learn about CAT Reporting, Trade and Position Reporting, Market Access and Best Execution.
Download