Streamlined Social Media Rules Would Treat Non-Advertising Updates As Normal Communication

Tuesday, August 16, 2011 06:25
Streamlined Social Media Rules Would Treat Non-Advertising Updates As Normal Communication

Tags: Social Media

FINRA has sent the SEC a new set of social networking regulations that would -- if approved -- streamline the whole process of advisors interacting with clients and the public online. 

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The draft regulations would exempt certain types of social media communications from the need to get advance supervisory approval, according to communications compliance software company Actiance.


As long as Tweets, Facebook posts, LinkedIn updates, and other messages are as closely monitored as email, FINRA now seems comfortable with the idea of advisors communicating on the fly.


Of course, any message that makes financial forecasts or promotes the advisor's products or services still has to go through the usual channels.


There doesn't seem to be an exception for the mostly static profiles that advisors post on places like LinkedIn.


Last year, FINRA considered this stuff advertising material and wanted it to be preapproved. So far, we haven't seen any indication that this will change -- but on the other hand, once an advisor's profile is online, it rarely needs to be revised fast or even all that often.


While Actiance's Susan Carter notes that automated compliance systems have come a long way, simply letting advisors treat their Tweets like broadcast email would provide enormous freedom to react to breaking news.


Social media messaging will still need to be recorded and reviewed after the fact, but this could be a huge step forward from the days -- just a few months ago -- when every Tweet had to be written and approved days or even weeks in advance.


That's the system Morgan Stanley, for example, ended up using. Their reps can be as active on social networks as they like, but their messaging has to be drawn from a central bucket of pre-fabricated text.


Advisors who can be nimble deserve to be rewarded, and these new rules might be able to make that possible -- within the rules, of course.


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