The move of LinkedIn to Wall St. marks a shift in the social networking market. In reality this seismic shift has been building for many years.

Social networks started out like so many other technologies – purely focused on consumers. The pioneers of sites like LinkedIn, Facebook, Twitter and many others resembled the Wild West. There were almost no boundaries. People from all over the world drove the movement. The promise of riches and a better way of life created near hysteria.  And finally the businesses followed – either as a mechanism to reach all of these consumer eyeballs or as a way to create new ventures around this social ecosystem.

This move parallels what we saw more than 150 years ago with our push towards the west. As more and more people populated the West new laws, new structures and new businesses naturally were created for the movement to continue and thrive. The settlers at the time could never have envisioned these changes, but they happened and they all seemed to come very quickly.

This is not unlike what we see with social sites and their movement into the world of business. Just like the lawless West saw the creation of a new brand of local enforcement, businesses face security and protection issues of their own. Fortunately, it isn’t a matter of life or death, but it is a matter of protecting massive investments made to brands and the customers they serve.

When there wasn’t a local enforcement agency in those days, the federal government stepped in to chart the unexplored regions of the West, to establish boundaries, and to plan possible routes for a transcontinental railroad. In a similar fashion, federal organizations like FINRA, the SEC, the FTC and the FDIC are stepping up to provide guidance and boundaries for organizations to operate in a social world in a civil and legal manner.

And while back in those days you would hold your information (and your gold) close to your vest, these days consumers and businesses are faced with massive tradeoffs between what details they share and what remains private. This battle is still playing out, both on the social networks and in the courts.

The movement westward also drove changes in how the world communicates. At one point mail delivered via boats and horses was enough. Of course with great expansion comes the need for faster communication.  Back then the telegraph and Morse Code made the instantaneous transmission of information possible. Similarly, social networks have forever transformed how we communicate to one another. In our age, email has become too slow. A tweet or network update has replaced so much of that archaic, “electronic mail”. And just as the telegraph transformed so many industries, social networks are having the same effect today. We see news breaking first on Twitter, like the assassination of Bin Laden. We see the advertising industry being flipped on its head as firms move to highly targeted social advertising. And instead of telling consumers what to think about products, they tell us.

The dust has yet to settle on the impact the wild west of social will have on businesses across the globe. One thing is certain though, the social movement will continue and consumers and businesses alike will settle into this new world and thrive in ways we couldn’t imagine 5 years ago.

One thing is clear. This IPO event for LinkedIn marks a big move for this industry as a whole and of course for them. Some are worried LinkedIn is overvalued. I would argue we don’t fully understand the value LinkedIn will drive for consumers and businesses. We may get enamored with the frothy valuations of still-private companies like Facebook. But let’s face it, they haven’t hit the market yet, LinkedIn has, and my money is on the world’s largest professional network getting bigger, better and stronger in the years to come. Who knows, maybe they will get a town named after them or at least a baby (it has to be better than “like”).

Welcome to Wall Street LinkedIn. The wild west of social just got a little tamer.

To compound the problem, new regulations are being issued from FINRA, the FDA, the FTC and many others. Even without these new regulations most companies agree that traditional regulations around communications apply in the new world of social media. For example, SEC’s Rule 17a-4 requires broker-dealers to preserve communications relating to their business and NASD Rule 3110 requires that all electronic communications pertaining to a firm’s business be retained, in a format that cannot be overwritten, for three years.

FINRA CEO, Rick Ketchum, points out that these social networking tools will “challenge your ability to ensure compliance with regulatory requirements”. Translation, regulated companies must start tracking social media participation just like they are tracking and retaining other forms of business communication. This was made very clear in an interview on CNBC where he calls for companies to open up and use social media tools but also points out that there must be an “audit trail” to ensure compliance.

And now today The Hartford announced the availability of social media liability insurance. Here is how they describe the offering: “The Hartford now offers broader coverage for data privacy breaches and social media liability exposures, such as online defamation, advertising, libel and slander”. What’s interesting about this move is The Hartford recognized the problem isn’t going away, or getting any smaller and traditional approaches to dealing with monitoring, protection and enforcement, like web filtering or content monitoring, simply fall short.

So what is a company to do that is concerned about their exposure yet understand that they have to open up access to these tools because the business impact is too great to ignore? We recommend following these steps:

1. Create your policy: define the social media policy that is appropriate for your business and industry (here is a great list of corporate policies from a variety of industries to help get you started).
2. Educate the company: train your employees on the proper use of these tools and how to stay compliant with company and industry policies.
3. Implement and enforce: deploy technology that allows you to control access at the feature level, monitor and moderate content as necessary, retain and archive data and make it easy to produce any social post on demand.
4. Monitor and learn: watch how groups take advantage of these tools across the organization, highlight best practices and retrain on policies if needed.
5. Iterate and expand: modify policies if appropriate, encourage broader adoption by employees and expand on the business processes that take advantage of these tools.

And optionally you may want to look at insurance offerings from companies like The Hartford. Liability in the social space has always been a concern and it will be interesting to see how this sector of the industry evolves. In fact, it may be that companies that follow the recommendations above might even qualify for a reduced rate. Time will tell.