Keeping FINRA And The SEC From De-Friending You


Law360, New York (September 03, 2010) -- Have you recently poked a friend or updated your status (e.g., “Michael is working the phones and selling some serious bonds!!!”)? Even if you haven’t spring-cleaned your Friend List or untagged yourself from an embarrassing photo, you would be living under a rock not to recognize the societal impact of social networking sites like Facebook, LinkedIn and Twitter, among a myriad of others.

With a social network developed especially for financial planners, where you can, “Find IFAs and Financial Advisers at the financial social network,” firms take notice.*1+ In fact, in January 2010, the Financial Industry Regulatory Authority recognized the broker-dealer industry’s use or potential use of social networking sites and issued Notice to Members 10-06, Guidance on Blogs and Social Networking Web Sites.

The use of social networking is rife with compliance issues that broker-dealers and investment advisers should consider when drafting and implementing policies and procedures. Compliance issues are not limited to scenarios where registered persons are seeking to build their business; firms engaged in online recruiting and marketing are also exposed to regulatory hurdles.

Even if a firm bans outright the use of social networking, firms may have obligations to ensure through monitoring and testing that improprieties are not taking place in their employees’ personal digital realms. Since 46 percent of American adults who use the Internet logged onto social networking in 2009,[2] compliance in the age of social networking is no small task.

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Eversheds Sutherland (US) LLP on:

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