3 Tips to Stay Compliant on Social Media

The key, of course, is educating and supervising advisors to make sure they are not posting inappropriate content. Social content can be considered “advertising” for regulatory purposes and must be treated as such. One option is prohibiting the use of certain terms in social-media postings, like “guaranteed” or even “recommend” or “endorse” to make sure your group is not running afoul of Rule 206(4)-1 of the Investment Advisers Act, which includes prohibitions regarding past recommendations of securities and customer testimonials.

Social media content needs to be monitored: Any discussion of fund performance that mentions elements of a fund’s return (e.g., one-, five- and 10-year performance); that promotes a fund’s returns; or communication initiated by the issuer that discusses the investment merits of the fund, needs to be preapproved by a principal of the firm.

Keep Good Records

Not only do firms need to monitor social media activity, they are required to keep records of all business communications on social networks. Specifically, digital communication, including tweets, Facebook postings and Instagram photos are all governed by rules that require capturing and archiving.