When social networking Web sites such as Facebook, Twitter, and MySpace began, they were devoted to the musings of like-minded individuals–often students–or the following of celebrities, or even, in the case of LinkedIn, professional networking and even job hunting.
But social media have evolved to include marketing, branding, corporate communications of all kinds, and customer relations–even being, in some cases, the easiest way for consumers to reach corporate attention over complaints or problems unresolved through more conventional means. And as they've grown more complex, the need to consider compliance issues for all communications on social media has grown from mere prudence to a necessity.
In January, FINRA issued Regulatory Notice 10-06, "Social Media Web Sites: Guidance on Blogs and Social Networking Web Sites"; while the need for compliance on the Web is not exactly new (in 2003, FINRA declared that if an advisor participated in a chat room on the Internet, what he said was "subject to the same requirements as a presentation in person before a group of investors"), 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.
A recent white paper by Osterman Research and sponsored by LiveOffice points out that many of the communications issued on social media contain business records, which are subject in the case of government to sunshine laws and, of course within the financial industry, to compliance.
Advisors may not necessarily think of a blog posting or a tweet as a business record, but, according to a white paper by Socialware, "The Companion Guide to FINRA/SEC Social Networking Compliance," (the Regulatory Notice and the white papers or links to them can all be found at InvestmentAdvisor.com), it 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, says the white paper, are considered advertisements; password-protected sites fall into the category of sales literature, and a chat room discussion is considered a public appearance.
