It’s pretty amazing if you think about it. The vast majority of compliance responsibilities for an RIA come from legislation that was written over seventy year ago. Terms like “advertising”, “testimonial”, “newsletter” and “seminar” were pretty much left unchallenged for those seventy years.
Then social media threw the Advisers Act of 1940 a bit of a curve ball.
“Well, what about ‘likes’ on Facebook?”
“I’m tweeting as myself, not as my advisor.”
“I have a LinkedIn profile but I don't advertise."
I give the SEC and FINRA credit for their efforts to help bridge these gaps in nomenclature and for addressing mediums that didn't exist in the pre-social media advisory industry.
So it may not surprise you to see that some crossed wires are starting to appear in the legislative world.
Case in point: the SEC requires that advisers monitor the social media activity of their supervised persons. This is often accomplished by simply requesting their usernames and passwords for social media sites that they will be using for business purposes.
Subsequently, several states (CA, IL, DE and MD, for example) have passed laws forbidding companies from requesting their employee's social media passwords. There are also rumblings at the Federal level that suggest these requests violate existing privacy laws.
Lawmakers advocating personal privacy ended up placing overarching state laws that could potentially conflict with regulated RIAs.
We advise chief compliance officers to collect social media attestation forms from employees that are active with social networking. These forms typically include a request for screen names for any social media outlets that the employee plans to use for professional use.
Suggestions For Advisors:
If you haven’t already, take steps to bifurcate your personal and professional social media networks. After doing so, you will only have to provide credentials to those social media sites that you will be using to deliver advisory services.
Suggestions For CCOs:
We suggest that you inquire with your social media archiving vendor to understand their protocols for setting up a new advisor for monitoring and archiving. With some vendors, the end user authorizes archiving directly with the vendor and the employer never has to see these credentials.
Social media is a fast-moving and increasing important part of our professional lives. With a solid comprehension of the compliance aspects of social networking, both CCOs and advisors will be empowered to embrace these tools with confidence and enthusiasm.
Posts
0 comments:
Post a Comment