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Tuesday 22nd of November 2011 01:32:06 PM
Social Media Compliance: A Few Notes
A summary of useful points made in last week's FINRA webinar on Social Media Compliance:
- They had a slide with a useful graphic depicting the crossover from personal use of SNS (social networking sites) into business use. If you have access to the materials, check it out.
- Tell your Reps that, when they are using SNS for personal use, if one of their friends initiates a discussion or raises a question involving what they do as RR’s, or what the firm does, or market commentary, they should immediately re-direct the discussion to their work email address. That is, once the topic relates to business as such, it has to be captured and subject to review.
- If you allow SNS for business, be sure to comply with the review expectations for static posts and interactive posts. If someone starts a conversation by posting, that first post is static and must be pre-approved. Subsequent responses to commenters are interactive posts and are subject to post, not pre, reviews. Once the subject gets changed by the Rep, that can be viewed as a new static post, which requires pre-approval.
- Example of “entanglement”: Rep writes a blog entry or post on SNS. He calls a friend and asks him to support him by jumping on and posting a comment. The friend goes on and writes something or provides a link… the Rep is now entangled with that third party content and the firm has responsibility for its content.
- Example of “adoption”: a third party comment/post comes in on a Rep’s post, and the Rep takes that position or supports it; uses it to support his original stance. He has thus adopted that third party post and the firm has responsibility for the third party post/content.
- There is skepticism (by industry members and regulators) about the abilities of outside vendors who provide SNS compliance services. When signing up, you should test drive the system and ask for an analysis of effectiveness.
- When considering the use of SNS, define your strategy: do you just want the firm to have a presence? Or do you want your Reps be actively engaged? Your strategy will determine how you design your procedures.
- If you prohibit the use of SNS for business purposes, FINRA does not require that you monitor for compliance with the prohibition. But it is typical to use things like attestations or Google searches or spot checks to test for non-compliance.
- When providing hyperlinks, you always have to consider whether there is misleading information on the page. But beyond that, you have to determine if the linked information was adopted… if a Rep directs a customer/reader to a specific link that is, say, an article about the product or service or strategy that he has discussed/recommended, then the content is adopted and the firm is responsible for its content. If instead, the firm or Rep provides a link to a site that doesn’t specifically relate to a specific customer transaction/recommendation, then it is not adopted.
- The act of monitoring third party content does not imply that it is entangled or adopted. So if you monitor third party content even if you don’t have to, you don’t raise expectations. Deleting content that is obscene or otherwise inappropriate is perfectly okay and also doesn’t raise the bar on obligations.
- Guidance on SNS has come out of the advertising regulation department but is now a routine subject of examination… and District offices will stretch their interpretations of the guidance. While the higher-ups at FINRA say there are no RULES, only GUIDANCE, in practice, FINRA expects a lot.
Hope this is useful to you. Happy Thanksgiving!
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