Social Media Compliance Concerns for Financial Services Firms

On January 25th, 2010, FINRA released regulatory Notice 10-06 which provides guidance on the use of blogs and social networking sites for Financial Services firms and their Registered Representatives.

Since Notice 10-06, financial firms have addressed this issue by either blocking access to these platforms because of compliance concerns, or by venturing into social media at varying degrees, to test the waters.

Through Notice 10-06, FINRA clearly demonstrated that it views all internet communication to be the same as other in-person or written communication. Electronic communication through email or social media platforms could then be considered to be correspondence, a public appearance, an advertisement, or sales literature. As such, each firm is required to have a policy in place that outlines communication procedures and allows for archiving of content. In addition, although facebook, LinkedIn and Twitter can be valuable marketing tools, there are precautions that should be undertaken to avoid recommendations, testimonials, or the appearance of support for 3rd party posts.

In an “Advisor Survey” completed by Socialware in June of 2010, it was found that over 60% of survey respondents were using social networks for business purposes (this number is expected to grow to 71% this year).

Of the respondents that are currently using social media, 100% of them believe that social media has had either a positive or neutral affect on their business, and 50% have been able to identify new referrals that resulted from their social networking presence.

However, of those using social networking for business, only 57% are aware of whether or not their firm has a social networking policy in place, and 32% knew that their firm did not have one set up. In addition, 66% of social networking participants have no archiving in place, and of those that do, half are archiving through manual procedures.

Finally, the survey results show that 39% of those using social media are prohibited from using facebook, LinkedIn, or Twitter.

Our Solution

In response to, and in accordance with the requirements put forth in Notice 10-06, we have adapted a detailed step-by-step compliance strategy that applies to facebook, LinkedIn, Twitter, and blogging. In addition, we have partnered with Smarsh “the managed service leader in secure, innovative, and reliable email archiving solutions for message compliance and records retention, proactive litigation readiness, and mail server data management.”

Your clients are on social media. Your competitors are on Social Media. You should be on Social Media too. We can help you get set up, use best practices, be more time efficient, and stay compliant so that you can spend your time doing what you do best — serving your clients needs.

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