Social Media

A customer posts a public comment on the firm's social media page alleging that her representative churned her account. A principal notices the post but doesn't treat it as a complaint requiring logging, reasoning that it wasn't submitted through the firm's formal complaint channel. Is this reasoning correct?

1. A.Yes — only grievances submitted through the firm's designated complaint intake channel trigger the complaint-handling framework.Wrong. The complaint-handling framework is triggered by the substance of the grievance, not by which channel it arrived through.
2. B.No, but only because public social media posts must always be removed from public view before the firm can proceed with any internal review.Wrong. This invents an unrelated content-moderation precondition that is not part of the actual complaint-handling obligation.
3. C.Yes, provided the firm responds publicly to the post within a reasonable time acknowledging the customer's concern.Wrong. A public response does not substitute for actually logging and handling the substance of the grievance internally.
4. D.No — a grievance alleging misconduct is a complaint requiring evaluation and appropriate handling regardless of the channel through which it was received, including a public social media post, not only complaints submitted through a formal designated channel.Correct. The channel through which a grievance arrives does not determine whether it is a complaint requiring handling.

Why: No. A grievance alleging misconduct is a complaint requiring evaluation and appropriate handling regardless of the channel through which it was received, including a public social media post, not only complaints submitted through a formal designated channel.

A representative posts a general market commentary on her personal social media account, unrelated to any specific product or firm promotion, but visible to her professional contacts including some clients. What must the principal consider regarding this post?

1. A.Whether the representative used her real name on the social media profileWrong. Use of a real name is not the relevant factor in determining whether the content falls within the firm's communications oversight.
2. B.Nothing, since content on a personal social media account is entirely outside firm oversightWrong. This is the exact incorrect assumption the question describes; content related to the securities business can fall within firm oversight regardless of the account type.
3. C.Whether the content relates to the representative's securities business and is subject to the firm's communications review and recordkeeping requirementsCorrect. Business-related content visible to clients can fall within the firm's communications oversight even on a personal account.
4. D.Nothing, as long as the post does not mention a specific security by nameWrong. General market commentary can still be subject to communications oversight even without naming a specific security.

Why: Even general social media content posted on a personal account can fall within the firm's communications-with-the-public oversight if it relates to the representative's securities business and is visible to clients or prospects. The principal must consider whether this content is subject to the firm's communications review and recordkeeping requirements, not assume personal accounts fall outside firm oversight entirely.

A firm markets a private placement relying on an exemption that prohibits general solicitation or general advertising, but posts details about the offering on a publicly accessible social media account followed by thousands of people with no pre-existing relationship to the firm. A principal reviewing this practice questions it. What is the concern?

1. A.There is no concern, since verifying investor accreditation before any sale addresses any issue with how the offering was marketed.Wrong. Investor accreditation verification at the point of sale doesn't address the separate general solicitation concern in how the offering was marketed.
2. B.The concern only arises if a non-accredited investor actually responds to the social media post.Wrong. The general solicitation concern exists because of the broad public marketing itself, regardless of who responds.
3. C.Broadly publicizing the offering to the public through social media undermines reliance on an exemption that depends on the absence of general solicitation.Correct. Broad public marketing undermines an exemption conditioned on no general solicitation.
4. D.The concern only arises if the firm paid to promote the social media post rather than posting it organically.Wrong. Whether the post was paid promotion or organic doesn't change that it was broadly publicized to the public.

Why: An exemption that depends on the absence of general solicitation or general advertising requires that offers be made only to persons with whom the firm has a pre-existing, substantive relationship (or through another permitted means); broadly publicizing the offering to the public through social media undermines reliance on that exemption.

A firm allows representatives to interact with followers in real time on the firm's social media account without prior approval of each individual response, consistent with its supervisory approach for interactive content. A representative then updates the account's pinned post and header image to include specific performance claims about a firm product. Is the same real-time interactive approach appropriate for this update?

1. A.Yes, because any content posted to a social media account the firm has already approved for interactive engagement is covered by that same approach regardless of its static or persistent nature.Wrong. This extends the interactive-content approach to content that is not actually interactive.
2. B.No — static, persistent content such as a pinned post or header image functions like an ordinary retail communication and should go through prior principal approval, unlike real-time interactive responses to individual followers.Correct. Static, persistent content should go through prior approval like an ordinary retail communication, unlike real-time interactive responses.
3. C.No, because social media accounts may never display persistent content such as pinned posts or header images under any circumstances.Wrong. This overstates a prohibition rather than requiring the applicable prior-approval process.
4. D.Yes, but only if the pinned post and header image are reviewed by a principal within a reasonable time after being posted rather than before.Wrong. This permits after-the-fact review for content that should receive prior approval like an ordinary retail communication.

Why: Static, persistent content such as a pinned post or header image functions like an ordinary retail communication and should go through prior principal approval, unlike real-time interactive responses to individual followers.