Lead Finance LLC Regulatory Compliance

In order to keep pace with this new speed of business and increased client expectations, odds are your firm is considering the compliance aspect associated with working with Lead Finance LLC.

The Financial Industry Regulatory Authority (FINRA) has issued guidelines regarding how broker/dealers and firms can use, and oversee, social media and marketing communications.

The regulatory organization first determined in March 1999 that any registered representative who participates in Internet chat rooms are subject to the same regulations that would govern an in-person presentation before a group of prospects or investors, a tenet codified in 2003 when the term “public appearance” was defined in NASD Rule 2210. But firms were still seeking answers to difficult questions, including participation in live or interactive media such as blogs, so FINRA convened a Social Networking Task Force — a group including both FINRA staff and industry representatives — in September of 2009 to further establish guidelines and policies to help prevent a firm’s personnel from inadvertently running afoul of the NASD’s Rule 2310 suitability requirements and regulations. In January 2010 FINRA introduced Regulatory Notice 10-06 with the goal to ensure that investors are protected from false or misleading claims and representations, and firms are able to effectively and appropriately supervise participation in these sites. At the same time, FINRA is seeking to interpret its rules in a flexible manner to allow firms to communicate with clients and investors using this new technology.*

* FINRA’s Guide to the Internet for Registered Representatives, SEC’s Rules Under the Investment Advisers Act of 1940, FINRA Regulatory Notice 10-06


Lead Finance LLC Compliance Perspective

In order to comply with FINRA Regulatory Notice 10-06 and the rules prescribed by FINRA Rule 2210/2211 it requires that any Lead Finance LLC Advertising Island™ receive approval from a registered principal of the firm or broker/dealer. Based on our interpretation of the regulatory guidelines, this would be considered a static posting which FINRA constitutes as “advertisements” under Rule 2210. Your firm is advised to keep a record of this page and all content and changes made. Once an Advertising Island™ is approved, changes or updates will only be made by Lead Finance LLC at the express written consent from a registered principal of the firm or broker/dealer.

Lead Finance LLC DOES NOT recommend buying any security or financial product or service in our efforts to market your company’s Advertising Island™. The objective of our marketing program is to connect potential consumers, interested in receiving more information relating to a security, financial product or service, directly with the firm or broker/dealer that is offering it. Based on our interpretation of NASD Rule 2310, only at that point is a registered financial advisor from the firm or broker/dealer permitted to recommend a security,  financial product or service, based on the individual circumstances and suitability of the investor to whom the recommendation is being made.

Lead Finance LLC does utilize independent third party posts in our marketing efforts that, based on our interpretation of the regulatory guidelines, do not fall under FINRA regulations as they do not recommend or solicit a security or financial product or service and serve only as an advertisement to encourage consumers to visit an Advertising Island™ and receive more information directly from a registered financial advisor at your firm or broker/dealer.

Please Note: Lead Finance LLC is not a Registered Financial Advisor or Certified Legal Council, nor do we hold ourselves out to be. All opinions expressed in the materials presented on our web site and individual perspectives released to the public through this web site, e-mail or any other means of transmission should not to be regarded or relied upon as sound legal advice and are merely intended to promote the awareness of regulatory compliance in an easy to understand format, based on our own interpretation of the regulatory guidelines as they relate to our services. This is not legal advice and you are advised to refer to FINRA's rules and regulations independently as well as seek certified legal council before contracting Lead Finance LLC on behalf of your specific financial product or service.


What You Need to Know

Given the numerous ways in which information and personal thoughts can now be transmitted across web-based media — particularly via social networking sites such as Facebook, LinkedIn, Twitter and YouTube — FINRA Notice 10-06 holds that the use of Internet-based social media communications must be viewed and monitored in the very same way as are written communications and in-person conversations. Therefore, these regulations and suitability requirements also apply to any forms of advertisement, sales literature and correspondence when used in social media situations.

The rules prescribed by FINRA Rule 2210/2211 require either the approval from a registered principal of the firm or broker/dealer, supervision or monitoring, or flat-out prohibition when it comes to using six primary social media platforms: LinkedIn, Twitter, Facebook, YouTube, public websites, and emails or instant messages sent to “retail prospects.” Essentially, compliance with these rules all boils down to what they determine to be “static” content versus “interactive electronic forum.”


A Summary of FINRA’s Current Social Media Policies


FINRA considers static postings to constitute “advertisements” under Rule 2210. As with other Web-based communications such as banner advertisements, a registered principal of the Firm must approve all static content on a page of a social networking site established by the firm or a registered representative before it is posted.* It is also necessary to keep records of all content and changes made.

Examples of Static Content:


The majority of social media usage will fall under interactive content as participation in social media is essentially contributing to the conversations taking place in social networks. Prior principal approval is not required under Rule 2210 for interactive electronic forums however firms must supervise these interactive electronic communications under NASD Rule 3010 in a manner reasonably designed to ensure that they do not violate the content requirements of FINRA’s communications rules. Additionally, firms must retain records of all communication via social networks as required by Rules 17a-3 and 17a-4 under the Securities Exchange Act of 1934 and NASD Rule 3110.*

Examples of Interactive Content:


Social Media networks provide firms the opportunity to engage with and provide value to their clients and prospects. They are not a place to advertise and push product however if a firm or its personnel decides to recommend a security through a social media site they must be in compliance with NASD Rule 2310 regarding suitability. Rule 2310 requires a broker-dealer to determine that a recommendation is suitable for every investor to whom it is made.

Examples of potentially appropriate and inappropriate usage:


Independent posts made by third parties or clients generally do not fall under FINRA regulations, so they generally require simple monitoring of this type of content. However, these posts can be attributed to the broker/dealer in instances where:


Since the responsibility to ensure suitability ultimately lies with the firm and its registered principals, they must develop a recordkeeping strategy to record any social media communications made by the firm’s personnel. And with so many channels of nuance, this is no small feat.

In response to this challenge, many technology providers are beginning to design software programs to perform this function automatically. Although FINRA does not endorse any such programs, many firms find it’s a technology certainly worth pursuing.


A Summary of FINRA’s Regulatory Notice 11-39


The obligations of a firm to keep records of communications made through social media depend on whether the content of the communication constitutes a business communication. The key to this statement is ensuring that every firm determines what is and isn’t a business communication, as well as implementing measures that require any business communication made by an associated firm member be retained, retrievable and supervised. The main question here is what constitutes a business communication? According to FINRA, firms must develop policies and procedures that include training regarding the difference between business and non-business communications to enable appropriate compliance.


A registered principal must review prior to use any social media site that an associated person intends to employ for a business purpose. In order for the social media site to be approved, the registered principle must determine that that the associated person can and will comply with all applicable FINRA rules, the federal securities laws, including recordkeeping requirements, and any additional requirements established by the firm. With regards to unscripted participation in an interactive electronic forum (such as status updates and commenting on a Facebook or LinkedIn post), participation is considered a public appearance and does not require prior approval, although firms should adopt supervisory procedures in order to stay within content requirements set forth by FINRA and the SEC.


Firms may not establish a link to any third-party site that the firm knows or has reason to know contains false or misleading content. Firms are responsible for third-party links in the following circumstances: direct links to the website, third-party content adoption through endorsements, and participation in the development of third-party content. So when are firms not responsible for third-party content to which it links? If the firm does not adopt or become entangled with the third-party content, as well as if the firm does not know that the third-party site contains false or misleading information. If you find that your firm’s website has become entangled with an inappropriate third-party site you can block or delete the content in order to remain compliant.


Firms must adopt procedures to manage data feeds into their own websites. In other words, if firms or representatives of the firm wish to add RSS feeds to their networks they must ensure that each feed is in accurate and functioning in a reasonable matter. The good news is that FINRA understands the situations where firms have received inaccurate data from feeds – just be sure to follow procedures in which you block, delete and record the feed in order to remain compliant. The final topic that FINRA addresses is the use of personal devices for business communications. Due to the development of new technologies and their ability to aid persons of the firm to perform their duties as well as serve their clients, FINRA permits the use of any personal communication device. The two caveats? The firm representative must have the ability to retain, retrieve and supervise the communication, which must be of a business matter.

This compliance guide attempts to present information in an easy to understand format. However, in case of misunderstanding, refer to FINRA rules and regulations and your broker/dealer’s policy.


Lead Finance: Built to Service Your Sales Model

We are solely focused on generating financial sales leads, and our program eliminates the problems associated with advertising on per impression or CPC model. We offer truly successful advertising and offer our clients a 100% trackable return on investment. You only pay for leads that will be fully qualified and converted - consumers that have decided to opt-in to hear more about your offer and  receive follow up communications from your organization. Period. Each qualified lead is required to provide a set criteria that is determined and customized to your organization (e.g. full name, telephone number, e-mail address, etc.) and have an expectation of a follow up communication regarding your advertised offer.

There is absolutely no impression or click limit with our campaign. We work on behalf of your organization, delivering traffic to your Advertising Island 24/7, until we have fulfilled our obligation and delivered the total  volume of converted leads requested by you in full.

Call 1-800-204-7140 Today to Speak to an Advertising Representative.

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Lead Finance LLC

2711 Centerville Road
Office Suite 120
Wilmington, DE 19808