Finra on social media: Don’t mix business and pleasure

Registered representatives should be careful about mixing personal use of social-networking sites with business use, a Finra executive said today.

Registered representatives should be careful about mixing personal use of social-networking sites with business use, a Finra executive said today.
“It’s the same issue as with e-mails — if you’re going to conduct business through e-mail, you can’t go home and do it there,” said Joseph Price, a Finra senior vice president of advertising regulation/corporate financing, and head of Finra’s social networking task force.
“You have to do it through a business e-mail [account] so it can be archived and supervised,” Mr. Price said today during a webinar sponsored by the Insurance Marketing Standards Association.
He said insurance B-Ds have been pressing Finra to find a way for reps to use social networks to conduct business.
Mr. Price said the current state of technology makes it hard to keep personal uses of networks like LinkedIn and Twitter separate from business uses.
He said technology vendors may soon have some solutions to make it easier for reps and broker-dealers to capture the relevant posts.
The technology used by Twitter, for example, is easy to capture, said Sam Kolbert-Hyle, vice president of business development at Smarsh Inc., a technology provider for financial services firms, in an interview.
Other social networking sites like Facebook are more difficult, he said.
If registered representatives are using social networking for business purposes, the communications must be captured and archived, Mr. Kolbert-Hyle said.
Finra is attempting to draw the line between static and interactive communications, he added.
“Static communications they define as like an advertisement, or an attempt to communicate about a specific product,” Mr. Kolbert-Hyle said.
“Any blog posting, or anything in a static environment about a product needs to be archived and also pre-reviewed,” he said.
But with a ” dynamic electronic communication” such as with Twitter or Facebook postings, “there are real limits in trying to pre-approve those,” he said.
So Finra is emphasizing the use of policies and procedures “so that the compliance department can review a subset” of those dynamic communications.
Industry observers have generally welcomed Finra’s approach, which allows the use of social media as long as it’s supervised.
Finra updated its compliance guidance in a January notice to members (NTM 10-06).
Finra’s Mr. Price said during the webinar that a ” just say no” policy toward social networking is likely to cause brokers to use the networks at home.