Is a blog considered an advertisement requiring prior firm approval, or is it considered "interactive media" that only requires compliance with the general supervisory rules? Also, am I liable if someone else posts something inappropriate on my blog?

— T.S., New York

FINRA recently answered this question in Notice to Members 10-06. According to that notice, a blog has historically "consisted of static content posted by the blogger." FINRA considers static postings to constitute "advertisements" under Rule 2210 and, if a firm or the broker sponsors a blog, the firm or the registered representative must obtain prior approval by a principal of any posting.

Although prior approval by a principal is not required under Rule 2210 for so-called interactive media (including electronic forums), firms must supervise these communications in accordance with Rule 3010, "in a manner reasonably designed to ensure that they do not violate the content requirements of FINRA's communications rules."

The key to the distinction between whether a blog is considered an advertisement versus an interactive electronic forum is whether it is used to engage in real-time interactive communications with third parties. According to FINRA, "the mere updating of a non-interactive blog (or any other firm Web page) does not cause it to become an interactive electronic forum, even if the updating occurs frequently."

Under certain circumstances, third-party posts may become attributable to the firm. Whether third-party content is attributable to a firm depends on whether the firm has: 1) Involved itself in the preparation of the content; or 2) Explicitly or implicitly endorsed or approved the content.

You should be aware that the rules only pertain to so-called social media sites that are being used for business purposes. If you have a personal page on a site like Facebook where you're only posting or blogging about your personal life, the FINRA Rules wouldn't apply.

Firms must have a general policy prohibiting any associated person from engaging in business communications on a social media site that is not subject to the firm's supervision.

What is a Letter of Caution considered to be: a sanction pursuant to Rule 8310; a finding of wrongdoing; a finding of improper activity; or a finding of violation of a FINRA rule?

— N.G., Texas

According to a FINRA Interpretive letter from August 2001, staff-issued Letters of Caution are a vehicle for the staff to address a rule violation that does not warrant referral to the Department of Enforcement for formal disciplinary proceedings. Therefore, Letters of Caution issued to member firms and associated persons by FINRA Regulation staff are not sanctions within the meaning of Rule 8310(a)(6).

However, a Letter of Caution is a sanction within the meaning of Rule 8310(a)(6) of the Procedural Rules when it results from a finding in a disciplinary proceeding. All Letters of Caution represent a determination that a violation has occurred, either of an NASD or FINRA rule, or a rule of the Securities and Exchange Commission over which FINRA Regulation has jurisdiction to enforce.

A new client of mine transferred his account to me from one of our other branches. When the account transferred in, I noted that we hadn't updated the client's information since he opened the account more than five years ago. I asked the client to give me information regarding his current income, net worth, other investment holdings and investment objectives but, to date, he hasn't responded.

I've put together a financial plan for him based on the information I have but before I provide it to him, should I make another effort to update his information?

— P.S., New York

FINRA Rule 2310 (the so-called "Suitability Rule") states that, "in recommending to a customer the purchase, sale or exchange of any security, a member shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of the facts, if any, disclosed by such customer as to his other security holding and as to his financial situation and needs."

The rule goes on to say that, "prior to the execution of a transaction ... a member shall make reasonable efforts to obtain information concerning: (1) the customer's financial status; (2) the customer's tax status; (3) the customer's investment objectives; and (4) such other information used or considered to be reasonable by such member or registered representative in making recommendations to the customer."

The key points in that rule are that the recommendation be suitable for the customer based on information disclosed by the client and that the firm shall make reasonable efforts to obtain the relevant information. If you've made a "reasonable effort" to obtain the information and the customer refuses to disclose such information, you could argue that you've complied with the rule.