The Financial Industry Regulatory Authority is digging deeper into how brokerage firms use social media and what measures are in place to oversee that use.

The independent regulator of securities firms has sent out letters asking for detailed information on how they use such sites as Twitter, Facebook, and LinkedIn.

Having issued two Regulatory Notices (found here and here) that provide social media guidance, in addition to including electronic communications as exam priorities in two of the last three years, FINRA is “now taking the next logical step and conducting a sweep of broker-dealers to determine their compliance with the communications rules,” says Daniel Nathan, a partner with the law firm Morrison & Foerster and FINRA's former vice president and regional enforcement director. With its Targeted Examination Letters, also known as a sweep letters, FINRA has invoked a rule that provides for periodic spot checking of firms' written and electronic communications.

FINRA's sweep letter requests the following information:

An explanation of how the firm is currently using social media and blogs at the corporate level to conduct business. 

An description of the business purpose of each social media platform as it is used by the firm.

Providing the URL for all social media sites used by the firm, the date the it began using each site, and the identity of all individuals who post or update content.

An explanation of how the firm's registered representatives and associated persons generally use social media for business purposes, including the dates the firm first allowed the use of each platform.

 An explanation of measures adopted to monitor compliance with the firm's social media policies, including any training, certifications, technology solutions.

The sweep letter also includes a request for information about the firm's top 20 producing brokers who used social media to interact with retail investors. Firms are also asked to submit written supervisory procedures concerning the production, approval and distribution of social media communications in effect during the time period February 4, 2013 through May 4, 2013.

“FINRA probably believes that, in view of these brokers' levels of activity, examiners are more likely to find that some of these brokers failed in some way to comply with its rules—such as content standards, or approval, review, recordkeeping and filing requirements—with respect to their use of social media to communicate with customers,” Nathan wrote in a recent client advisory. FINRA is likely to seek disciplinary actions against some of these brokers, he said.

Nathan suggests that when a firm receives one of these requests it should take a comprehensive look at their procedures for approval and review of social media communications, determine whether these procedures are adequately documented, and whether their registered representatives, associated persons and compliance officers are adequately trained to apply these procedures.