• 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.

Have you ever logged into Twitter and noticed that your Direct Message count was shrinking? You probably thought it was a case of the mysteriously deleted DM. Doing a quick Google search on the issue would present you with the answer. It actually isn’t a bug, a hacked account or a mystery at all. Twitter is behaving exactly as it was designed.

Here is the explanation from Twitter on the topic:

“Direct messages behave more like tweets than emails: any action the sender of a DM takes on a direct message will affect the recipient of that DM.  As the recipient of the Direct Message, you have the ability to delete it; the messages you delete also disappear from the sender’s sent tab. Conversely, deleting direct messages you have sent will also delete the message from the recipient’s inbox forever.

The number next to your Direct Messages tab reflects the number of direct messages in your inbox. If this number has changed recently and you have not deleted any of your messages, remember: the sender of the direct message has the ability to delete messages from your inbox, these messages are not mysteriously disappearing or getting lost.”

Repeat after me. A DM is not the same as an email. A DM is not the same as an email. A DM is not the same as an email.

Now that we all understand how DMs work and the fact that the creator can delete them or the recipient (remember, it will be deleted on both accounts) lets dive into the compliance issues for any regulated industry such as FINRA/SEC firms, Educators, Government agencies or entities, etc.

The most obvious area this impacts from a compliance standpoint is archival and discovery. If you are in a regulated space and are not currently using an archiving solution then you are at serious risk of being out of compliance. You may be doing the right thing by not deleting any sent DMs but the second a recipient deletes a received DM it will be removed from your account as well.

For a lot of Twitter users they like to keep their inboxes clean just as they do with email. And there are a countless number of services (such as DM Whacker, SocialOomph, Twitter DM Deleter) that make it easy to quickly delete all DMs, whether received or sent. Translation, you need to act now.

If you are a medium to large firm it is critical that you scan and archive this information in real-time. If you don’t you risk someone sending a DM and then removing it. The result would be a lack of compliance with FINRA/SEC guidelines, Freedom of Information ACT guidelines, possibly corporate guidelines and the list goes on.

For additional information on compliance issues related to social networks please download our recently published guide.

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

“75% of companies did not have policies for employee use of social media in place and are opting to “wait and see”.”
Come on folks it’s time to get in the game. Social media is here to stay and if you haven’t started thinking through the strategies of how it can impact your business you are going to be left behind. Earlier this week one of the world’s most successful, AND most conservative, companies sent representative to Socialware and over 50 different companies to better understand strategies around social networking and to bring back ideas to the CEO and the rest of senior management on how to adopt these tools for their company. If they can do it, you definitely can.

“19% of Asia-Pacific employers claimed social networking was a good method for promoting collaboration and communication”
Now we are talking. Collaboration and communication is just one way companies can benefit from the use of social networking sites. You could dedicate an entire blog to this topic. In fact, there are over 42 million results on Google around the topic.

“31% of Australian employers cite social networking as helpful in building their brand.”
Quick, you need to reach 400 million people, what do you do? Superbowl ad maybe? Only if you can afford those cute talking babies from E-Trade. If not you better start looking at social media. Facebook grew by 50 million users in the last 5 months to reach a grand total of 400 million. Throw in Twitter and LinkedIn and that’s another 100 million at least. The point is there is no better way to start a conversation with the people that will care about your brand than on these sites. Find the way that works for you and then go say hello.

“Do not block them. If you’re blocking them, then your younger employees, especially those of Gen Y age, are going to either disengage and fold their arms or just get out their iPhones and BlackBerries and access them on there.”
We’ve all been here before. What happens when you forbid somebody to do something? They want to do it even more. Now with that said I’m not suggesting you open the floodgates. There are very good business reasons why you might not want employees viewing Facebook videos or photos at work. All of that activity can clog the network and rob core business applications from the bandwidth they need. So here is an alternative. Define your social media policy, turn on access, lock down parts of these sites that are off limits and then explain to your employees why. Now you’ve given them access to parts of the site that are the most valuable to your business and you’re protecting the company at the same time.

“Ultimately, businesses have an opportunity to use social media in a way that helps employees feel truly connected to the business.”
This is a good way to sum it up. Social media is here to stay. It is having a measurable impact on businesses. You can manage it on your terms. And it will increase, not decrease productivity (I have a blog post coming on that topic next).

Tweet me when you get started.

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.

As Melinda Catapano points out in the article “if this is connected to official agency work, you better be able to produce that record.” But aren’t these consumer sites, just used for personal use? The answer is it depends. While the lines are blurring between personal and professional use on these sites one thing is clear. If you are using them to communicate agency work you can be assured that it is going to be governed by the same set of principles that govern other communications

In fact, Wisconsin Attorney General J. B. Van Hollen recently issued an opinion in which he states that electronic communications made by elected officials are public records, even when they are posted on social networking sites. Van Hollen states that the Wisconsin Public Records laws applies whenever the content is connected to the official’s purpose or function.

One option many agencies have employed is to simply block access to these sites. That course of action flies in the face of The President’s Open Government Directive.  These sites are the perfect platform to create transparency, participation and collaboration. The Bright Side of Government recently did a blog post that discusses this exact topic. Of course with increased levels of participation comes the need to comply with the federal guidelines such as the Freedom of Information Act and the Public Information Act.

Catapano admits that “she, like numerous other CIOs, didn’t have a clue as to how to archive external social networking posts”. She goes further by saying “it would probably be a good master’s thesis because everybody needs those answers and everybody seems to be avoiding the problem.”

Well there is good news Melinda. One you are not alone in that other industries are struggling with this same challenge. Here is a quick snapshot of the issues that financial services organizations face around embracing social networks.  Second, there actually is an automated solution to archiving social network activity and content. Socialware’s Risk Manager solution was built from the ground up to solve this problem and many others that can arise from business related usage of social networks.

Today we are currently working with a number of government agencies and look forward to sharing their success stories over the coming weeks and months. In the mean time if you are interested in signing up you can request a free invitation here.

I will be the first to say that policies are important when it comes to opening up the social web to your employees. But a word of caution, don’t stop after pressing the save button.  In a recent report from Deloitte they posed the question to employees “what is your company’s policy when it comes to use of social networking channels”? Here were the responses:

• 26% – There are specific guidelines as to what you can and cannot say online in relations to the company and/or client matter
• 7% – The policy is to use your discretion when it comes to posting comments and opinions on the world wide web and social networking sites
• 11% – There is a policy, but I don’t know what it is
• 23% – There is no policy
• 24% – Don’t know if there is a policy

Note that 58% either don’t have a policy or don’t know what it is. This should be concerning. After all if your company believes it’s important enough to create a policy isn’t it just as critical to ensure the policy is followed? On that topic how will you monitor it to ensure compliance? In regulated industries like financial services and government this is even more critical as regulators require that certain activity be captured and archived.

The Independent Insurance Agents & Brokers of America (IIABA) recently published a great resource titled “Creating a Social Web Policy for Your Independent Agency”.  The report offers some very good recommendations and detailed steps on how to go about creating a social media policy. However, there are two recommendations that I would like to expand on.

The first is related to “compliance with federal and state discovery, document retention and other laws and agency procedures.” In the guide they state “employees should copy and paste any client specific social media communication into the agency management system and record an activity in the same manner they would in using other media.”  While that is one way to capture and retain the data it is enormously unproductive and it also raises questions around completeness of the archive.

What happens if someone forgets to take these steps or decides they simply don’t want to? A better approach would be to leverage automated solutions, like our Risk Manager product as an example, that sits between the end user and the social networks to automatically capture and retain the content. Not only will this eliminate the manual work around data capture and retention but it also guarantees completeness.

The second is around advertising statutes and regulations. They correctly state that “social media posts are communications subject to various federal and state laws/regulations, including characterization as advertising under some state laws, so employees should make sure they are complying with all such laws in using social media.” This is correct. The detail that is missing though is how you will comply in this new environment. Again I’ll go back to our Risk Manager product as a mechanism to help ensure compliance on this point and many others.

I encourage you to download the IIABA report if you have not created your social media policy. If you are looking for more information on how the FINRA/SEC rules impact social network use you should take a look at this summary as well. Last be sure you have the tools in place to make it as easy as possible for your employees to meet the policy and compliance guidelines as they start to use these powerful sites.