As you may know, the SEC recently released a National Examination Risk Alert regarding investment advisor use of social media. Don’t be alarmed: Compliance and regulation parameters have not changed. The SEC is simply offering financial professionals some valuable advice that is definitely worth reading and considering.
Broken down into three sections (staff observations, third-party content and recordkeeping responsibilities), the report encourages investment advisors to constantly gauge the effectiveness of their compliance policies and offers a variety of key factors to consider regarding the use of social media. The SEC report is quite lengthy, so I will highlight just the first section regarding staff observations.
Many firms have policies and procedures that cover the use of social media. However, the SEC found the staff members of some firms confused about the implementation of these policies. Here are four key observations from the report:
- “Overlapping protocols that apply to advertisements, client communications or electronic communications, which may or may not specifically include social media use.”
- “Confusion about which procedures or standards apply to social media.”
- Lack of clarity among staff regarding the types of social networking activity that are permitted or prohibited by the firm.
- Inattention among staff regarding the use of social media by solicitors.
Given the newness of social networking, it’s not surprising that there’s haze around its policies and procedures. The SEC advises clarity regarding social-media activity. Make sure you have a clear and consistent policy regarding the use of social media for yourself and your employees.
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Amy McIlwain is a professional speaker on social media and president of Financial Social Media, an online marketing firm specializing in the financial industry. She can be reached through her website at www.financialsocialmedia.com and on Facebook, LinkedIn, and Twitter.