PHOENIX – Financial services firms can get themselves caught in their own tracks on social media, worrying excessively about Securities and Exchange Commission rules on disclosures, marketing and communication, as well as Financial Industry Regulatory Authority guidelines.
In truch, the guidance out there is “pretty flexible,” said Rajib Chanda, a partner with the Boston-based Ropes & Gray regulatory law firm, at the Investment Company Institute’s Mutual Funds and Investment Management Conference.
“There’s a lot of room to maneuver,” he said.
The guidance is largely principles-based and not prescriptive – and the most important prescription that is always in effect, he said, is … keep good records of the communications that your company and its employees are making over these interactive, multi-layered media for distributing information and ideas.
Here is a succinct list of practical tips for getting seriously involved in social media and not running afoul of the law in the process. Experts weighing in included Chanda, FINRA vice president Thomas A. Pappas, Fidelity Investments associate general counsel Alexander C. Gavis, data storage consultant Mark Diamond, and U.S. Global Investors president Susan B. McGee.
•
• Decide the level at which to get engaged. Firm level only? Firm and rep? Firm, rep and all employees?
•
•
•
•
•
•
•
• Cordon off company data. Put a “data envelope’’ on the iPad that only you can update and whose content can’t be moved onto the Net.
•
• Make sure you can retrieve the records, not just retain them. With social media tracking technology, “you may be able to suck it into a record-keeping system, but what happens when you try to pull it out?,’’ Gavis asked. Can you make a coherent, defensible presentation of what is being talked about? Email is sequential. Social media has many levels of conversations, with disjointed connections, across time and even across sites.
Then there is Pappas’ five-point prescription, if you want to successfully pass the scrutiny of one of its examiners.
An examiner of the regulator of brokers and advisors will look for:
1. Are there written supervisory procedures?
2.
3.
4.
5.
The nature of media may change. But one thing is constant, Pappas said: The firm has the responsibility to oversee its business communications.