Social Media Leads to New Compliance Issues: Is Your Firm Prepared?

While researching for our upcoming Buy-Side Compliance & Risk conference in December, I came across an interesting topic which will probably develop into a session for the event – how is social media creating new compliance issues for firms?

Social media sites such as Twitter, Facebook and LinkedIn are now all the rage, even in the financial services space. Marketing managers across the financial services space are seeing the benefits of a good tweet.  I know we here at FTF all have LinkedIn accounts where we post our coming events, host webinars and tweet on a daily basis.  Due to this phenomenon, many companies are now even bringing social media gurus onto their staff.  Though with this outburst of online networking there comes some apprehension.  FINRA has even stepped in to provide its suggestions on how to not get carried away with social media.  Earlier this year they released Regulatory Notice 10-06, which provides guidance on how FINRA rules governing public communications now also apply to the use of social media sites for business purposes by financial services firms.

New technology is always going to be present, but with that comes new regulations and rules.  Therefore firms need to understand and make it known to their employees the risks that are being made by posting information to these sites.  One thing to note from FINRA’s notice is that firms are not responsible for any third-party comments on their social media sites, but they will be responsible for any feedback or “likes” from their employees.  One click of the mouse could create a legal issue for your firm.  Also, there are some instances when messages are being released to a large group of people.  In those cases FINRA recommends that your firm review the material before it is posted to any sites.  Overall monitoring of social media will be a challenge that many firms will need to start to make a priority.  Do you have someone on your compliance team overseeing these sites?  If not, should you?

FINRA is going to have a problem, though.  Social media sites are always changing and making updates to their services.  Rules FINRA has released today may be obsolete in a couple of months.  Which leads to the real question…Is social media too hard to control?  Over time, will it prove to be a help or a hindrance to your firm?  Whatever the answers are it looks like social media is here to stay, so we better work out the compliance kinks now!

This entry was posted in Compliance, Regulation, Social Media and tagged , , . Bookmark the permalink.

One Response to Social Media Leads to New Compliance Issues: Is Your Firm Prepared?

  1. Pingback: Seeing Social Media as a Business Tool, Not Just a Trend | The Bull Run

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