Facebook’s user data policy could be liability for advisers

Advisers who use Facebook would be wise to pay attention to the latest dust-up over the social-networking site’s privacy policy.

Last week, the Electronic Privacy Information Center and 14 other watchdog groups filed a complaint with the Federal Trade Commission about Facebook’s new policy of sharing more user data with outside companies such as Yelp, an online directory of local businesses, and Pandora, an Internet radio and music review website.

Financial advisers may not be paying much attention to the continuing debate between Facebook and privacy advocates, but they should, said David Rosedahl, a securities attorney at Briggs & Morgan PA.

Of course, many brokers and advisers are using social-networking sites. But broker-dealer firms are required to supervise all the business-related networking communications of their individual brokers.

As a result, brokers may need their firms’ approval for each social-networking site they use, Mr. Rosedahl said. “So a firm can say LinkedIn is OK, and they have to have a procedure saying that.”

The question, though, is: “How many sites share information like Facebook does?” Mr. Rosedahl said.

“Facebook’s personal information can migrate to others” and potentially put brokers in violation of their firms’ procedures, he said.

Facebook said the changes let users opt out of sharing more of their profile information.