What a difference a decade makes when finance meets technology. Notice MR0281, originally issued by the Investment Industry Regulatory Organization of Canada (IIROC) in 2004, provided guidance for securities dealers on the nature of communications materials, including advertising and correspondence with clients. But that’s not all – IIROC Rule 29.7 (supplemented by IIROC Notice 11-0349) requires firms to produce proof of these materials during regulatory audits. With the rise of social media usage by financial services institutions, the IIROC amended MR0281 in 2011 to include guidance on the method of communication as well, including Facebook, Twitter, YouTube, blogs, chat rooms, and other forms of social media. Similar to FINRA in the US, the IIROC requires firms to have the ability to archive all communications via social media networks. IIROC Regulatory Notice 11-0349 and IIROC Rule 29.7 address both recordkeeping and supervision guidelines for social media use. Key takeaways include:
- Recordkeeping – Dealer members and their firms must retain records of their business activities, regardless of how it is communicated (whether on a firm issued device, or personal). As a result, dealer members and firms must have a system for archiving and retrieval of these records. This includes Twitter, Facebook, blogs, chat rooms, and other social networks.
- Suitability and Recommendations – Dealer members and firms must monitor the content delivered to social networks in accordance with IIROC Dealer Member Rule 1300.1 prohibiting electronic communications that constitute a recommendation. Dealer members should have a tool in place to monitor social media activity for non-compliant trigger words and phrases.
- Supervisory Responsibilities – IIROC Dealer Member Rule 29.7 requires policies and procedures to avoid misleading or false statements to clients, including pre-approval of content.
The IIROC oversees securities dealers and sets industry compliance regulations. They are also responsible for enforcing these regulations, including reviews of policies and procedures, documents, and client correspondence. Regulations notwithstanding, financial service organizations are not immune to new avenues for brand awareness, and recognize the need for social media engagement. A study by LinkedIn and Cogent Research found that “social media is proving to be an invaluable tool with five million High Net Worth Investors in the U.S. and Canada actively using social media to help them with their financial decisions.” Some Canadian financial groups have already gotten the social media ball rolling. Sun Life Financial Canada keeps their fans engaged with links to helpful interactive tools, industry information, and finance tips. Even better, they respond to their fans comments – proving that keeping the social in social media is possible, even in regulated industries. Oh, and don’t forget – if you’re a Canadian organization registered in the US, you’ll have the SEC and FINRA to contend with as well. Read More Articles Like This OSFI Cyber Security Self-Assessment Guidance – Is Your Bank At Risk? Updated Social Media Guidance from the FFIEC: Is Your Bank Still Compliant? SEC Update: 6 Ways For FinServ To Safely Use Social Media