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Reporting from the SIFMA Compliance and Legal Society Annual Seminar

It’s an exciting time to be working on social compliance at Hearsay Social. Not only are we a SIFMA strategic partner, but we also just announced today that we now power social marketing success and regulatory compliance for Ziegler, a specialty investment bank and a leading financial services organization.

Dedicated to serving Hearsay Social customers and leading the way in social compliance, I recently traveled to Miami, Florida to attend the SIFMA Compliance and Legal Society Annual Seminar. The panel on emerging technologies like social media was very well-attended with panelists from Vanguard, Fidelity, RBC Capital Markets, Bank of America Merrill Lynch, Bingham McCutchen, and FINRA.

Below, I share my five most important takeaways from the social media panelists and my conversations with compliance and legal professionals whom I met at the event.

1) Don’t fear the Like button (in most instances).

  • Since the SEC issued its Risk Alert on Investment Adviser Use of Social Media in January, many journalists have sensationalized the guidance, construing it to mean that all instances of the Like button in the financial industry would constitute prohibited client testimonials for SEC-registered Investment Advisers.
  • Panelists stressed that this alarm was not the intention of the SEC and that they expect FINRA to clear up the confusion surrounding the Like button in their next notice. Essentially, the Like button cannot be banned by financial services across the board.
  • Only in very limited and specific situations could a client clicking an adviser’s post (as opposed to an adviser’s overall page) create a problem. Even then, the content of the post would be determinative in whether or not liking a post would be considered a client testimonial.

2) Firms must consider employee privacy and provide sufficient disclosure about what will be retained by the firm.

  • Many publications have featured stories about job applicants being asked to provide social network passwords to potential employers, which has been quickly denounced as a breach of privacy.
  • Likewise, the panel discussed the NLRB’s second social media report, detailing cases in which employees were fired for protected, concerted activity, like talking about work conditions or pay with co-workers in the scope of employment around a virtual water cooler (i.e. social media sites).
  • The takeaway for financial firms is that they must clearly state a code of employee conduct in their social media policies. However, social policies cannot be overly broad so as to “chill speech.”

3) Employee collaboration tools and compliance solutions to support them are top of mind with the FINRA Social Media Taskforce and several member firms.

4) Firms want more retrieval functionality to quickly access their social data for audits or e-discovery requests.

  • One panelist said that technology integrations are key to efficient retrieval of social data.
  • Compliance officers want to be able to pull up archived content and approval records quickly with full threads, lots of filtering functionality, and more.
  • Hearsay Social financial services customers use our compliance module, which shows comments to reviewers in context, classifies social media content by type, and offers instantaneous, self-service export of archived data, along with several other features for complete compliance.

5) Revisions to proposed FINRA Rule 2210 are out now.

  • Last week FINRA issued a response to comments on its Proposed FINRA 2210, which we wrote about in an article for Financial Advisor Magazine back in August.
  • Under the new rule, interactive posts/tweets will no longer be classified as “public appearances” but the distinction between static and interactive content and their differing pre-approval requirements will remain.
  • Posts/tweets will not need to be pre-approved or filed with the FINRA Department of Advertising (but must still be monitored).
  • Advisers’ social media profiles and other static content must still be pre-approved and monitored.

Many thanks to the panel’s moderator and our strategic partner, SIFMA, for putting on such a candid and timely panel. We look forward to attending more of these events and working every day to better serve you, our customers in the financial services industry.

Ally Basak Russell

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