Posts tagged ‘broker-dealer advertising’

Social Media: Best Practices to Avoid Regulatory Findings

The topic of social media is not a new one – the regulators and firms have been struggling with this issue for several years now. There are still many firms lacking policies or procedures in this area, or looking for guidance.

The below was a recent FINRA citing relating to social media:

Citing: “The firm does not specifically address social media sites such as Twitter, Facebook, Linked-In, etc., in addition to the supervision of the potential misuse of these sites and others.”

How To Avoid This Issue:

Have a clear written policy on social media, and address the following:

    (1) What is allowed and not allowed. (LinkedIn? Facebook? – And what information can be posted or transmitted?)
    (2) How social media participation will be monitored. (Will the firm set up an account and require reps to connect? Will the firm conduct internet searches on the names of reps to determine their participation? How often?)
    (3) What records will be retained to evidence this monitoring.

Other Comments:
Practically speaking, we are seeing firms permit the use of LinkedIn in a limited way. (Business card information only) The most common weakness found in this area seems to be the lack of monitoring and oversight (and/or lack of documentation of such) of Registered Reps.

Let’s assume your firm utilizes an annual compliance questionnaire in December, which asks the question about social media, and a Rep answers incorrectly that they do not participate. Or, the Rep answers correctly that they do not participate, but a few months later the Rep creates a LinkedIn account and “forgets” to notify Compliance. How is the firm identifying those situations? Several firms we have worked with utilize Google, or sign in to the social media website, and search the names of their Reps. This should be done on a regular basis, as not identifying an active social media site for 6 months could form the impression of a lax compliance procedure in this area.