Social media has so much to offer the financial services industry yet education, awareness and questions are holding it back. Our hope is that by bringing together industry experts, passionate users and those standing on the sidelines that we will be able to accelerate the adoption of social media.

To help foster and grow the community we’ve created the SocialTurns Council. The Council is made up of compliance, marketing, technology and financial services professionals who are pioneering social media adoption in the financial services industry. Please join me in thanking all of our Council members:

• Pat Allen, Principal, Rock The Boat Marketing
• Debbi Corej, VP of Compliance, Prudential
• Julie Gebert, AVP of Compliance, Cambridge
• Kip Gregory, Principal, The Gregory Group
• Bruce Johnston, President & CEO, Advisolicity
• Kristen Luke, Principal, Wealth Management Marketing
• Christina L. Nelson, Senior Editor, Financial Planning Association
• Stephanie Sammons, CEO, WiredAdvisor
• Stephen Selby, Director of Regulatory Services, LIMRA
• Jennifer Sussman, Director of Online Marketing and Experience, American Century Investments
• Pete Chiccino, EVP and CIO, The Bancorp Bank

In the last few weeks we’ve invited users to sign-up for the preview and the reaction has been tremendous. To date we’ve had almost 500 users join SocialTurns from 13 different countries and the discussions are off and running ranging from enterprise social media adoption, to FourSquare, to employee guidelines.

We invite marketing, technology, compliance and financial services professionals to join the conversation. As you navigate the social media waters this community is here to help you make the right turns to get the most out of social media for your brand, your employees and your customers.

And don’t forget to let us know what you think or how we can improve. Here is one review from David Rosen at The B2B Formula.

See you on SocialTurns.

PS: After you join please add a badge to your website, blog or Twitter profile to help grow the awareness of SocialTurns and help fuel the discussion.

Some of the topics discussed were:

- Implications and questions of FINRA Notice 10-06 for financial advisors.

- Whether or not financial advisors will get value out of social networks.

- How you should treat personal vs. professional data while on these social networks (check back soon for a detailed blog post on this topic).

- Whether this new channel will overload the compliance department.

- Why firms and advisors are having a hard time understanding the compliance issues.

- Why firms are racing to adopt social media.

- Whether or not these are just tools for the younger generation.

- Best practices for advisors to get the most out of their social media investment.

- How long it takes to get a program up and running so advisors can start leveraging these sites.

I hope you enjoy the discussion and I look forward to seeing you at the CFDD conference in October.

• “We aren’t allowed to use social networks but we can use LinkedIn”
• “Our firm allows us to use LinkedIn but the activity isn’t monitored”
• “LinkedIn doesn’t fall under Notice 10-06”
• “We prohibit use, and our employees follow that policy”

For those of you following the social media trends in this sector you will recognize right away the risk caused by the beliefs above. Before going any further let me make a few things clear. LinkedIn is a social network. More importantly, LinkedIn is absolutely governed by Notice 10-06. And last, firms that allow the use of LinkedIn without the appropriate policies and oversight are guaranteed to get fined by FINRA at some point soon.

Just look at a recent study by Ledermark. They found “more than 40% of professionals under 50 said a social media presence has led to doing business. They prefer LinkedIn for business and Facebook for personal use; however, both social networks allow them to be more visible, have a platform for questions and answers, and reconnect with old friends, introductions and referrals — all cited as how social media helped bring in business.”

If you think your reps aren’t using LinkedIn do a quick search to find out.  Just enter your company name and see how many profiles show up.

Now onto the assessment. To complete the assessment simply answer yes or no to each question below. Give yourself one point if you answer NO and zero points if you answer YES. Your level of compliance risk will be described below. Let’s get started:

1. Do you prohibit registered reps from using LinkedIn?
2. Is this practice defined in a social media policy?
3. Have you completed spot audits to ensure they are following the policy?
4. Are you pre-approving their profile content before it is posted?
5. Are you completing spot audits to ensure the content hasn’t changed?
6. Are you preventing reps from displaying recommendations on their profiles?
7. Are you archiving the content posted to and created on LinkedIn?
8. Are you supervising the content posted to LinkedIn after the fact?
9. Are you preventing reps from rating answers provided by other members of LinkedIn?
10. Are you preventing reps from emailing more than 25 connections via LinkedIn Mail?

Now tally up your score and match that to the table below.

Score = 0: Good news, you aren’t at risk but you likely aren’t getting any of the benefit of LinkedIn either because you are in total lockdown.
Score = 1-5: You are probably handling compliance in a highly manual fashion. Not only is this costly but it is also error prone.
Score = 6-10: You are at high risk for a fine from FINRA. Quickly find an automated way to manage site access, content archiving, supervision and discovery.

If you are concerned and need some more information here are a few resources that can help:

• Companion Guide to FINRA/SEC Social Networking Compliance
• Social Networking Compliance Webinar
• Summary blog post from the FINRA webinar discussing Notice 10-06

• We launched a new social media archiving solution called Socialware Sync aimed at individuals and small firms.
• We renamed Risk Manager to Socialware Compass as part of a broader re-branding effort with our products.
• We launched three new websites to support these changes: www.Socialware.com, Sync.socialware.com and Compass.socialware.com.

Socialware Sync

In our conversations with industry experts, clients and prospects it became very clear that there were two camps. Those that needed a full-blown social networking compliance solution and those that just needed social media archiving. Enter Socialware Sync. This product was custom-built from the ground up to be the most complete, easiest to use, pure social media archiving solution on the market.  Not only can you easily add your social networking accounts, such as LinkedIn, Twitter and Facebook, but you can also search across your entire archive. Try finding an old Tweet or Status Update without Sync. It is next to impossible.

In addition, Sync makes it easy for you to download and repurpose any of your content. For example, I recently live tweeted the entire FINRA webinar on social networking compliance. After the fact I went to my Sync archive, downloaded all tweets that referenced the #FINRASN hastag and then copy/pasted that content into this blog post. This is just one way you can repurpose your content and I can’t wait to hear what other customers come up with.

Curious to try it yourself? Give it a test drive for free. Just head over to the Sync site to sign up for a 30 day free trial. And if you know of anyone else that would be interested in the application please help us spread the word.

Risk Manager Socialware Compass

We’ve learned a lot over the last 6 months. One thing is that the idea of automating a social networking policy is a bigger market than we expected. Yes, regulated firms like financial institutions have some of the most immediate needs today, especially given the guidance from FINRA, but the reality is there are many enterprises looking for the same thing. This includes educators who are struggling with controlling access and archiving social media content as well government agencies who are struggling with how to deal with regulatory challenges in their own world. Given all of this, plus our updated product plans we decided to re-brand Risk Manager to Socialware Compass.

Not 1, but 3 new web sites.

While we all loved our old web site it was time for a change. We updated the navigation to reduce complexity, we added more multi-media content including photos and videos and we separated out the content by product to ensure we could be as detailed as possible in addressing visitors needs around each solution. Along with all of this structural change came a re-branding effort, which we are all excited about and hope you are as well.

Please take a look around and let us know what you think. Next on the list will be refreshing our blog – check back soon for those changes or simply subscribe to our blog so you can get updated when we post new content.

I want to give a huge thanks to our entire development team for building such a great product in such a short period of time, and of course our in-house designer who designed the new sites and did all the work on the product at the same time! You guys rock.

“This program addresses implementation of new guidance that FINRA recently issued in Regulatory Notice 10-06, concerning social media. FINRA staff and industry practitioners offer practical guidance on how to monitor and supervise social networking sites.”

Once again if you participated in last month’s webinar (here is a full summary of that session), read Notice 10-06 or downloaded our Companion Guide to FINRA/SEC Social Networking Compliance, you didn’t miss too much. The participants asked a number of questions to help further clarify a few issues. In addition, panelist like Joanne Rodgers, a Vice President of Compliance at New York Life, shared her recent experiences around their social networking compliance pilot.

Without further ado here are all of my live tweets that I posted during the session. If you are going to scan the posts (there are over 70) be sure to pay attention to the bolded ones. There are some great nuggets here. You can also check out other references to the hastag #FINRASN which tracks social networking posts related to FINRA.

As always, feel free to follow me on Twitter and send me any questions you have.

• Panelists include: Doug Preston, Senior VP and Compliance exec from BofA/Merrill Lynch
• Joanne Rodgers, VP of Compliance at New York Life and Joe Savage,  VP in FINRA’s Investment Companies Regulation Department
• Notice 10-06 was designed to cover business use of social media, addresses 5 key topic areas
• Recordkeeping: firms must keep records of participation or use in social media (same as email or IM)
• Recordkeeping: may not be easy to capture this content, aware of vendors (like Socialware) that can automate this
• Q: acceptable formats for social media archiving? Some firms filing tweets to FINRA, PDF’s have been submitted to date
• Suitability: Must be careful of recommendations on social media, refer to existing guidance for this matter
• Suitability: be careful not to mention specific funds or securities, firms should have a policy to address this
• Types of forums: content posted on site generally treated as advertisement, must be pre-approved
• However, interactive content is not required to be pre-approved. Blog posts are generally ads, adding comments makes it interactive
• Wall posts on Twitter or Facebook are interactive and do not require pre-approval
• Supervision: social media must be supervised, either in a pre-approval or post-approval method, use appropriate risk based methods
• 3rd party posts: firms may be responsible if they become entangled or endorse the post of a 3rd party
• Q: Is the Notice considered a rule? No. It is simply additional guidance. It may lead to new rule making around advertisements
• Q: Can you violate a Notice? No. You have to violate a rule but this guidance is still important
• Q: Can you selectively remove 3rd party comments and leave others? Does that imply an endorsement? No.
• Moving to panelists from the firms. Let’s discuss the different types of social media and is it right for you?
• Doug – social media includes wiki, forums, Facebook, LinkedIn, Twitter, YouTube, document sharing, social spaces (2nd Life)
• Doug – a website that only posts information is not a social space, it must be designed to share content between users
• Doug – Facebook has 400mm users, LinkedIn has 60mm, there are 50mm tweets each day, MySpace has 300K new sign-ups each day
• Doug - if access is permitted the activity must be retained and monitored by the firm, conduct ongoing analysis of the tools
• Joanne – we had to consider the size and structure of our firm, many agents are decentralized, manual process wouldn’t work
• Joanne – doing a pilot to help us automatically comply with the regulations, field force & recruiters anxious to get involved
• Joanne – looking at developing best practices and field templates, but agents will want their own touch, must be personalized
• Q: are their growth opportunities through social media? No hard data yet, a lot of calls to arm from sales, responding in kind
• Joanne – we believe there is consumer expectation but also need to be careful that we don’t cross the line
• Joanne – see opportunity for lead generation for new business and for recruiting new agents, LinkedIn ideal
• Joanne – we had success recruiting new agents as part of our pilot
• Joanne – we put together guidelines and best practices as part of our pilot, provided a series of templates as well
• Recruiters need to be careful about what they are posting as well
• Competitive pressures? Joanne – Yes we hear it on a daily basis. We factor it in but it is not the driving force.
• Doug – I agree. Sales force will want it, still in its infancy from a sales standpoint, commercialization will happen quickly
• 48 asset management firms surveyed – 2/3rd said they don’t have budget for social media plans
• Doug – we go through a pilot process, based around business objectives, long process, lot of controls, doing a # of these now in SN
• Q: is internal training content on a wiki subject to recordkeeping rules. Yes absolutely.
• Joanne – tell us about your pilot process. Vendor selection – key was records retention, biggest challenge for compliance
• Joanne – also wanted a vendor that could control access to individual site features. Pilot for 25 agents and 25 recruiters
• Joanne – noticed most agents participated on Facebook, saw a lot of activity on LinkedIn from recruiters
• Joanne – going through final stages of evaluating pilot, looking at how our agents are using the tools, good success stories
• Joanne – recruiters were successful, need to provide agents more tools on how to navigate this space, success on agent side as well
• Doug – on banking side have rolled out a number of social networking tools, associates like it, use it, need more controls
• Doug – been doing this for a couple of years on the banking side, rolling out pilot on the securities side
• Joanne – staffing implications? still an unknown, impact to sales material review unit, impact to email monitoring group
• Joanne – pilot was limited to 50 people, hard to judge scale at this point, have to keep an open mind and be flexible
• Doug – I would echo those remarks. Training helps and is always the key when rolling these things out
• Joanne – who is the vendor? We cannot disclose it at this point.
• Joanne – need to complete technological due diligence, retain and retrieve records, ability to integrate with email systems
• Joanne – our vendor allows us to block certain functionality on the social networks (i.e., block posting videos)
  
• External use tools hosted outside the organization (Twitter, Facebook) present a greater risk, work activity takes place everywhere
• Doug – develop policies to address social media use, provide guidance on usage (developing handbook), inform on regulations
• Doug – use tools to supervise, block activity when prudent and monitor as appropriate, ensure we can retain & supervise
• Doug – provide initial and ongoing training, developed process for social media issues, built in escalation process across org
• Joanne – FINRA should be proud, ahead of the curve. Happy to see guidance, haven’t seen same movement on insurance side
• Joanne – hoping to see them follow FINRA’s guidance.
• Joanne – what about brand risk? Always viewed agents as ambassadors, have to provide guidance and formalize a process
• Doug – compliance is the guardian of reputation risk and protects us in that regard
• FINRA will look for written supervisory procedures addressing how you supervise social media, that you testing, audit, etc
• Joanne – established a social media working group to figure out whether content is interactive or static, have to give guidelines
• Doug – policies are ever changing, must adapt as we learn, the definition of static vs interactive is tricky, training is key
• Q: firms that allow LinkedIn profiles how are recommendations monitored? Joanne – our vendor can block this
  
• Joanne – when a recommendation is given you need to approve, if you can’t block build it into your procedures, audit on backend
• Who can use social media? Joanne – Consider the compliance history of each rep before opening flood gates, training requirements
• Doug – I agree, certain tools will be more applicable for certain individuals and departments
• Training task – always a never ending process, need to keep abreast of innovations in the industry – this is a challenge
• Doug – we have a great training organization, bedrock to moving out any new technology
• Static vs. Interactive content will be a tough area – gray area in middle.
• 3rd party posts: only responsible if you adopt or entangle firm in post
• What about disclaimers? Firms may consider this, part of facts and circumstances of a situation
• What about monitoring? Firms that allow typically have some level of monitoring to protect against inappropriate content
• May be complaints that come in, firms need to keep an eye out for those to ensure compliance
• Entanglement: firm puts up a posting, 3rd party reads, calls you, comments on it and then you get involved in an answer
• Blog post, 3rd party responds, you forward and comment that you agree (you are then adopting it)
• Joanne – NYL does not have a blog, we do have social media monitoring services, directed towards Corp. Comm.
• Joanne – our vendor can block favoriting or liking a post to protect us against inadvertent endorsement should have in-motion monitoring for posts
  
• Doug – you need to have automated controls, should have in-motion monitoring for posts (Socialware provides this)

For more information on this webinar check out Doug Cornelius’ summary post here. And finally if you are interested in getting started with social networking please take a look at how Socialware is helping firms and individuals today.

Some of the questions answered in the interview are:

- What is Social Middleware?
- How does it enable or help the Open Government directive?
- Is this something that empowers agencies to adopt Social Networks?
- Is this something that makes these tools more useful?

For answers to these questions and more click the play button below or listen to the interview on the Federal News Radio 1500 site.

Interview description
“As state and local governments move forward using Twitter and Facebook, questions are looming as to how to best use these new social media tools to reach private citizens. Social middleware is being used to help ward off the potential IT risks and compliance issues associated with using social media tools.”

The challenges are very real in these highly regulated environments. Kip Gregory sums it up well “Who could blame any firm operating in a regulated industry for taking a cautious approach in the face of all that? Especially in financial services, which is at its core an industry built around the management of risk. The question is: How do you, as a competitor in this business, choose to respond to a clearly shifting landscape?”

Of course the latest move by FINRA helps ease some of the concerns of these financial firms. With the release of Notice 10-06 they address some of the big questions firms are asking. In addition to this Notice you can also download the Companion Guide to FINRA Social Networking Compliance. And if you are still hungry for more information be sure to check out the play-by-play summary of the February 3^rd FINRA webinar on this topic.

The article then moves on to discuss the “techno-solutions” to solving the social networking compliance problem. They highlight our Risk Manager solution for it’s ability to turn on or off any part of a social network that could cause a compliance issue. In addition, there is discussion around our ability to moderate content before it hits the social sphere as well as providing full capabilities to do a post-review after the fact.

I don’t want to give the entire article away so let me just leave you with a few final thoughts:
- Social networks are here to stay and the firms that find ways of adopting them first will have a big advantage. In fact the article points out that “100 percent of the 48 firms surveyed thought social media was here to stay and 84 percent thought it would have a lasting impact on financial services.”
- You do have to create a social media policy (don’t skip this step) – here is a good place to start (first paragraph)
- Look for ways to institutionalize your policy through social networking compliance solutions.
- Plan for change – the sites change, compliance issues change and the way advisors use these tools will change.

Read the full Research Magazine article here

Kristen Luke

1. Tell me a little about your background and Wealth Management Marketing
“Prior to starting Wealth Management Marketing in October of 2008, I headed up the marketing department of a boutique wealth management firm in San Diego for 3 years.   It was a natural transition from working at my previous job to starting WMM since I performed similar tasks, but now I do it for a variety of firms instead of just one.   I have a BA in Business Economics from the University of California, Santa Barbara and an MBA with an emphasis in Marketing from San Diego State University.  WMM develops marketing plans for independent advisors and also provides the back office support required to implement the strategies. Basically, we are an in-house marketing department outsourced.”

2. Can you profile the clients you typically work with?
“I primarily work with independent investment advisors and financial planners.  The majority of my clients are RIAs which can range from solo practitioners with $10 million in AUM to firms with 20 employees with a few hundred million in AUM.  I also work with individual advisors at larger brokerage firms who need help creating their own individual marketing plans or are looking for assistance in creating a social media marketing strategy.”

3. What are their top issues/challenges when it comes to social media marketing?
“I consistently hear the same two challenges from my clients:
- Meeting compliance requirements.  Up until recently, it was not clear what an advisor could and could not do according to FINRA.  It is still unclear about what the SEC requires.  So many advisors tell me that their compliance departments won’t allow them to participate in social media.  I’m not sure if this is going to change now that FINRA has released their guidelines.”
Quick Note: The Companion Guide to FINRA Social Networking helps address these questions.
- “Finding the time to participate in social media.”

4. What percentage of your clients are engaged with social networks today?
“Almost 100% of my clients are engaged with social networks in some way.  Most of them are only involved with LinkedIn.  Closer to 50% are involved in Facebook or Twitter for business purposes.”

5. For those that are active how are they dealing with compliance issues?
“Some advisors have not been concerned about it and are doing nothing.  Others are passing everything through their compliance departments prior to posting on LinkedIn, Facebook and Twitter.  Others are using sites likes Socialware to archive their social media activity.”

6. What would recommend to your clients that are getting ready to start engaging with social networking?
“I would recommend that they first understand what they can and cannot do from a compliance standpoint.  Then I’d recommend they start playing around with the different sites to get an understanding of which ones they like.  I find that the advisors that are most successful with social media are the ones who personally enjoy interacting on the different sites.  Once an advisor has a basic understanding of social media, it’s important to create a plan of action.  This includes finding their target market and centers of influence on the different sites, determining what type of information to broadcast and how often to do so.  Social media is like any other type of marketing.  It should be planned out to increase the likelihood of success.”

It is clear from our day-to-day conversations and interviews like this that social media will continue to play a big role for independent investment advisors and financial planners. As Kristen points out it is critical to understand the compliance issues before jumping into this new channel of communication. I’ve already mentioned the Companion Guide to FINRA Social Networking and in addition you should look at the summary of the recent FINRA webinar explaining Notice 10-06 on Social Networking Compliance.

For more information from Kristen you can follow her on Twitter or at her blog.

“This webinar covers compliance and regulatory considerations when using social networking sites to communicate firm business. With the advent of Facebook, LinkedIn, MySpace and Twitter, business use of social networking sites has become popular and can present supervision challenges for firms. Panelists from FINRA discuss the guidance that was recently issued in Regulatory Notice 10-06.”

If you already read Regulatory Notice 10-06 you didn’t miss too much. I will say the most valuable part was the Q&A from the audience and FINRA staff. As you might expect the FINRA team focused on the overarching guidelines but didn’t spend too much time interpreting specific situations. They made it very clear that this is the responsibility of the firm to evaluate a sites capabilities and determine what the firm’s policy will be on usage, supervision, record keeping, etc.

If you are looking for more details on how these guidelines get interpreted for use on social networks you should download the Companion Guide to FINRA Social Networking Compliance.

And if you are interested in a summary of the webinar here are all of my live tweets that I posted during the session. Feel free to follow me on Twitter and send me any questions you have.

• Joe Price talking about FINRA task force on social networking, 14 industry participants, came out with Notice 10-06
• 5 key points, record keeping, suitability, types of content, supervision & 3rd party posts
• Record Keeping: rules flow from SEC standards, no way to change this. Must retain, archive and retrieve to be compliant
• Record Keeping: technology is going to be the issue, FINRA spoke to firms (including Socialware – we solve this today with Risk Manager)
• Record Keeping: discussing integration to enterprise archives, lot of interest in area, each firm needs to assess each solution
• FINRA will not endorse any technology provider, firms need to assess the fit, determine if it delivers on compliance needs
• interested in position on acceptable formats of social media messaging for FINRA filing and internal record keeping
• Question: how do you file a tweet? Acceptable filing format is PDF for FINRA but not for retention (discovery issues, etc)
• Suitability: 01-23 applies to social media directly, applies around recommendations, “call to action” or “suggestion”
• Suitability: more specific to individual more likely it will be a recommendation, general news not a rec.
• Suitability: call to action is key, not going to have prior approval requirement so be careful of what you post
• Possible use of templates? Firms have libraries, drop a recommendation of an approved template, be careful of specific products
• Question: “Business as such?” SEC term, not addressing it in Notice 10-06, books and records rule apply in this situation
• Question: “if we decide to utilize social media we must have technology to track information” there are low tech options…
• …technology is going to be key to make this scale
• Question: “if a rep indicates where they work is that an advertisement?” ex: business card info on LinkedIn, likely already approved
• Question: “business related inquiry on social media site?” addressing later, need to have procedures for reps to follow
• Content Types: “interactive electronic forum” have def. of public appearance (i.e., chat rooms), must all be supervised
• Content Types: public appearances do not need to be pre-approved
• Content Types: blogs? static communication = advertisement = prior approval. However some allow for interaction
• Content Type: These interactive blogs would be considered a public appearance (i.e., allowing comments)
• Question: “What if firm hosts a blog and allows for 3rd party comments? What if it is a marketing brochure blog?” This is static
• Content Types: key ideas, employees should have site use approved for use of logos, content, etc (the static elements)
• Content Types: engaging on the sites can then be supervised post-use, these are the interactive pieces
• Content Type: firms should decide on their own policies as part of this.
• Content Types: key is whether or not a dialogue is supported or intended on these portions of social sites
• Technology to capture content is still evolving, will there be compliance grace period? FINRA answer “No”
• Firms must make the call if a vendor can meet the FINRA requirements (check out companion guide http://bit.ly/72HiGj)
• Recently looking at a blog that wasn’t interactive, send email back and comment *not real-time interactive communication*
• Question: “On Twitter, is initial posting interactive or static?” background content is static part, tweets are interactive
• Question: “what if social site doesn’t allow for archiving?” answer don’t use it or use a 3rd party solution (i.e., Socialware)
• Question: “what about broker-to-broker communication?” defined as institutional sales material (2211), already defined
• Question: “How will FINRA test compliance?” FINRA provides policy guidelines, new process, examiners take steps to analyze steps  …
• Question: …will look for supervisory steps, will look for policies, will look for other steps that compliance is being addressed with
• Supervision: interactive communications can be supervised, implement risk based principles to review communications
• Question: “Use of sites for recruiting?” Yes – they are subject to FINRA advertising rules, static vs. interactive
• Question: Recruiting issue – expectation of earnings. Be careful here, this is most frequent issue
• Question: “can registered reps conduct pre-approved, scripted, filed FINRA presentations via a webex type of application, w/instant messaging” …
• …”assuming IM’s are being supervised by a reg. principle?” webinar=static, questions=interactive (can be supervised)
• Supervision: can choose to pre-approve or not, can choose to sample pre or post, lot of flexibility, you decide
• Supervision: communication between research and investment bank always need review, as well as incoming complaints
• Question: “do personal social sites of RR need to be monitored to ensure not being used for professional use?” …
• Question: … firms need to establish procedures/policies on this, once used for business firms are responsible,
• Question: “don’t want reps using Facebook, agree not to, is firm responsible to still track?” I don’t know, maybe based on person
• Question: “are firms accountable for how RR identifies themselves on personal SN site” firms need to adopt clear policies on this
• Question: “does review of interactive communication have to be conducted by a registered principal” can be some delegation
• Should not allow RR to use social media sites if you cannot supervise it (for business purposes)
• Ensure you train those that are granted access, enforce your procedures, have consequences for violations
• Question: “prohibit from using certain social site features, are firms accountable if RR use them if “prohibited”?” …
• Question: Answer is same. They are responsible. (Socialware can disable these features completely to protect the firm – look at Feature Level Access Control of Risk Manager)
• Question: “how do you supervise an anonymous complaint?” guidance already provided, must be able to identify person & issue
• 3rd Party Posts: not subject to advertising rule (great clarity), situations where you can be held accountable
• 3rd Party Posts: adoption & entanglement, you republish or direct people to content, you just adopted it and endorsed it
• 3rd Party Posts: influenced posts, can you please post a testimonial to my Facebook page = entanglement
• Question: “implicit endorsement of posts, rep didn’t remove a comment?” does not create an endorsement situation
• Question: “RR retweets a post, is this an endorsement/entanglement” absolutely endorsement or adoption
• Question: “What if you “like” a comment on Facebook” Yes absolutely that is an endorsement (FYI – Socialware can block this)
• Question: “what if statement is just wrong, what should firm do?” adopt policy to enable quick action, still needs to be supervised
• Adoption & entanglement is SEC concept, one-off answers not the way to go, each firm should develop a complete policy
• Firms are doing a lot of different things to monitor 3rd party posts, complaints, publishing guidance
• Great FINRA webinar, hope you enjoyed the live tweets, be sure to grab the Companion Guide for SN Compliance http://bit.ly/72HiGj

Look for much more from Socialware on this topic. And if you haven’t registered for a Risk Manager invitation please do so here (it is free). Of course, if you want to get started right away you can sign up for the premium version here.

For the most part there is nothing new in the Notice. FINRA reinforces their position on long standing electronic communication guidelines reiterating that those rules apply exactly as stated for social networking sites such as Facebook, Twitter and LinkedIn.  For example:

• Recordkeeping – firms ARE required to retain social media records that a related to a broker-dealer’s business.
• Supervision – firms MUST monitor the extent to which employees are complying with policies.
• Pre-approval – firms MUST define their policy for pre or post approval depending on their risk profile.

While reinforcing some of the core guidelines there were a few key clarifications that make adopting social networks a little bit easier in the financial services arena.  For example:

• Static vs. Dynamic content – a registered principle is still required to pre-approve any static content such as a profile or Twitter background details. Dynamic content such as wall posts constitute an interactive electronic forum and therefore firms do not have to have a registered principal approve these communications prior to use.
• Third-party posts – FINRA clarified that posts by customers or other third parties are not governed by rule 2210. However, if a firm endorses one of these posts they may become attributable to the firm.

While this update is a very positive step for firms there is still the open question of how to address the compliance requirements in an automated fashion.  Additionally, FINRA does not address every fine grain issue you will run into on social networks that could trigger a compliance violation. For example, does Favoriting a tweet trigger rule 2210 because of an endorsement? And more importantly how will protect your firm from these possible violations?

To help firms accelerate their adoption of social networking tools Socialware has released the Companion Guide to FINRA/SEC Social Networking Compliance. This guide provides a detailed analysis of social networks and how their capabilities can trigger regulatory rules. Furthermore, it provides a clear checklist of requirements to evaluate social networking compliance solutions.

For more details you can read the press release and download the guide now.