On Wednesday I hosted a webinar to help clarify FINRA’s latest updates: Interpreting FINRA’s New Social Media Regulations: What Notice 11-39 and FINRA 2210 Mean for Your Firm and Advisors. We received a lot of excellent questions and, as promised, I’ve posted them for you. If you missed the webinar, send us an email and we’ll send you a copy of the recording and slides.
Can you give examples of static content versus interactive content according to FINRA?
FINRA says in Notice 10-06, “Generally, static content is accessible to all visitors to the site.” The best example of static content is Facebook, LinkedIn, and Twitter profile data: your name, hometown, age, university, place of business, etc. Static content is information that remains posted and visible to the public (or your Facebook friends only, depending on your privacy settings) until the user changes it on his/her account. The content in tabs, sidebar ads, and widgets can also be considered static content.
The clearest example of interactive content is Facebook’s chat feature: with Facebook chat, there is no running record of the chat visible to the public.
Facebook posts, LinkedIn status updates, and Twitter tweets are grayer area right now. We’ve heard FINRA panelists say that posts and tweets are static content because the Facebook “wall” or Twitter “feed” serves as a visible, running record of content so that it is available to the public even after the online conversation had ended. Notice 11-39 appears to support this position. However, if the FINRA Proposal to the SEC passes, classifying posts and tweets as either static or interactive will become a moot point because they will fall into the new Retail Communication category under FINRA Rule 2210. The new rule will have an exemption to the pre-approval requirement for retail communications posted on social networks:
“Proposed FINRA Rule 2210(b)(1)(D) would except from the principal approval requirements of proposed FINRA Rule 2210(b)(1)(A) three additional categories of retail communications, provided that the member supervises and reviews such communications in the same manner as required for supervising and reviewing correspondence pursuant to NASD Rule 3010(d). These communications include: (i) any retail communication that is excepted from the definition of “research report” pursuant to NASD Rule 2711(a)(9)(A); (ii) any retail communication that is posted on an online interactive electronic forum; and (iii) any retail communication that does not make any financial or investment recommendation or otherwise promote a product or service of the member.”
Part of the rules say that a tweet or Facebook post might now be considered static content. Does that mean every tweet will need approval?
Yes. See above. We realize this can be cumbersome and thus, we welcome the rule change laid out above.
When are the proposed rule changes going into effect?
It’s unclear when the rule changes will go into effect. FINRA members and the public were allowed to comment on the proposed rules until August 24, 2011. The SEC will now consider all submitted comments and make its final determination on the proposal. Subscribe to our blog and we’ll be sure to let you know as soon as we know more.
Does Hearsay Social advocate that all “sharing” be controlled? What flexibility do advisors have to differentiate?
It’s not that all sharing should be controlled, per se, but that it should be pre-approved if necessary, monitored, and archived in accordance with FINRA regulations. Of course we advocate allowing your advisors to use their authentic local voices on social media, but this must be balanced against the risks of customizing content. This is where a good workflow tool comes into play. Corporate marketing can feed content to advisors, which the advisors can then customize and submit for approval to their principals.
For example, an advisor might post a wall message with a link to a New York Times article on wealth management with a comment about a key takeaway from the article. Or, an advisor might share a link to the new YouTube campaign that corporate is running.
What is the biggest risk you see with social content for the financial services industry?
I think the biggest risk is turning a blind eye to what your employees are doing on social media. Social media is viral by design. The ability to spread timely information quickly is both its greatest strength and weakness. While you cannot always control what is said about your brand, you can respond quickly and contain any negative sentiment before it gets out of control.
How do these regulations and proposed rule changes affect mobile device usage of social media?
Notice 11-39 clearly states that the device used to access social media sites is irrelevant to firms’ obligations to pre-approve, monitor, capture, and retain data. You must put a system in place to comply with the rules regardless of whether your advisors access social sites from the office, home, remote location, or mobile device.
Does the Hearsay Social platform include the monitoring of mobile devices such as Blackberries, iPhones, and iPads?
Yes. See above. Because Hearsay Social is API-based and serves as a portal, the transmitting device has nothing to do with the way we capture the social media data. We can capture and archive your employees’ business conversations no matter where they are, and we don’t need to access data from their personal accounts to do it. An API gives you a direct connection with Facebook, LinkedIn, and Twitter. When something changes in their applications, the APIs continue to work right along with them.
Conversely, a proxy is an application that sits between the two systems. It’s like a gatekeeper that decides whether or not to let someone in based on a set of rules. With a proxy, when something changes within the natives sites (i.e. Facebook, LinkedIn, Twitter), the proxy isn’t sure what to do because the rules no longer make sense. So, it stops working and leaves you potentially unprotected with holes in your data.
Can you provide an example of a customer using Hearsay Social in the insurance sector?
Yes- Farmers Insurance Group. They’ve deployed thousands of Facebook Business Pages with us. Farmers Insurance Agent James Peregrino is one “local” Hearsay Social customer. James estimates that 80% of his life insurance leads and 60% of his overall leads come from Facebook.
Missed the webinar? Send us an email and we’ll send you a copy of the recording and slides.