Supervising social media

Guidelines issued Monday by the Financial Industry Regulatory Authority are intended to “ensure that firms and brokers use social networking sites in an appropriate manner," says Chairman Rick Ketchum. FINRA is the largest independent regulator for all securities firms doing business in the United States, overseeing nearly 4,750 brokerage firms, about 167,000 branch offices and some 633,000 registered securities representatives.
Regulatory Notice 10-06 says member companies need to supervise the use of Web sites such as Twitter, Facebook and LinkedIn by their employees — and "associated persons," such as their brokers and representatives — for public communications, to ensure that customers are not misled.
Firms also need to ensure that they can retain records of those communications.
Twitter, a 140-character online text-messaging phenomenon, started as a way for people to update friends and family on what they were up to at any given moment, but has become a powerful business tool. According to a recent report by the Pew Internet and American Life Project,
46 percent of American adults who use the Internet logged onto a social networking site in 2009, which is up from 8 percent in 2005. The "of the moment" nature of Twitter postings and FaceBook chats have an almost ephemeral feel, compared to blogs — something FINRA seemed to take into consideration. (Get its updates on Twitter by following @FINRA_News.)
It considers static postings to blogs to constitute “advertisements,” and any firm or registered representative that sponsors such a blog must obtain prior principal approval of any such posting. The exception: real-time interactive communications — such as tweets that are fed onto a site. FINRA considers that portion of the blog to be an interactive electronic forum that does not require prior principal approval — but that must be supervised.
The guidelines address the use of social media sites by firms and personnel for business purposes, not use by individuals for purely personal reasons. Translation: It's still not a great career move to post photos from your BFF's birthday bash at the beach bar — but FINRA won't care if you do.