A sound social media governance program means more than having a social media policy, or updating your document retention policy to include social media activity. It may also mean updating your Sarbanes-Oxley Act (“SOX”) compliance program to ensure that your company is complying with Section 409. Section 409 of SOX requires companies to disclose material changes in their financial conditions or operations, by updating information on your social media networking sites. Credit Suisse Securities was fined $4.5 million by FINRA last month, and one of the reasons for the fine was failing to update its website with relevant and accurate disclosures concerning the performance of some residential subprime mortgage securitizations (“RMBS”).
In its May 26, 2011 press release, FINRA described its findings and the basis for its fine:
FINRA found that in 2006, Credit Suisse misrepresented the historical delinquency rates for 21 subprime RMBS it underwrote and sold. Although Credit Suisse knew of these inaccuracies, it did not sufficiently investigate the delinquency errors, inform clients who invested in these securitizations of the specific reporting discrepancies or correct the information on the website where the information was displayed. Credit Suisse also failed to name or define the methodology used to calculate mortgage delinquencies in five other subprime securitizations. Additionally, Credit Suisse failed to establish an adequate system to supervise the maintenance and updating of relevant disclosure on its website (emphasis added).
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