Social media has become a popular source for communicating with friends, following your favorite celebrities, networking and job hunting. Companies are now establishing their own Facebook, Twitter and LinkedIn websites to market their business. With the recent crackdown by federal regulation on the financial services and banking industries, it’s no surprise that there will be more compliance issues with these social media websites.
FINRA issued Regulatory Notice 10-06 stating, “as social media have matured, the need to both monitor and control what advisors and employees say online has grown, and the question of how to do so can be challenging to answer.”
Advisors have to be aware of what is posted on these social media websites, who has access to it and also need to have someone constantly monitoring it. This concern isn’t just inadvertently offering advice online either. According to a white paper by Socialware,
“(A tweet) can be considered advice or marketing material, depending on the content and the number of people it goes to. Information on publicly available Web sites (is) considered advertisements; password-protected sites fall into the category of sales literature, and a chat room discussion is considered a public appearance.”
However, companies should not avoid social media for fear of compliance because it is a growing trend and provides new ways to reach out new prospects and keeping existing clients informed. Investor Relations Global Rankings (IRGR) states, “the use of (social media platforms) by companies in the U.S. has grown from 13% in 2009 to 27% in 2010; growth rates are even faster in other regions of the world, although the U.S. has the highest percentage.”
FINRA also offers webinars for companies to understand how to use compliant social media websites. Also, there are software firms that can help you monitor and regulate these sites.