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Get Compliant with Social Media

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Agenda

Speakers Bio

Risks Without Compliance & Social Media

Compliance 101

Frequently Asked Compliance Questions

Social Media Policy

How to Train & Educate Employees

The Cost of Compliance

Q & A

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Jennifer Openshaw

• A nationally known expert

• Wall Street Journal columnist

• President, Finect:

• Compliant social media simplified

• Bank of America, BankOne/JPM

• Frequent speaker

• Author of “The Millionaire Zone”

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Stuart Fross

• Partner, Foley & Lardner, LLP • Former Fidelity International General Counsel

• US Securities Counsel, Finect

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Jeff Spears

• CEO of Sanctuary Wealth Services, LLC;

• Former National Sales Manager, Bank of America Private Bank

• Head of Montgomery Securities Private Client Group

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1.

Risks

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What are risks of NOT using social media for investment firms or advisors?Q:

Opportunity Cost

Visibility

Allow Competitors to Define You

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What are risks of using social media?Q: Providing investment advice?

SEC or State regulator

Compliance policies & procedures

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RISK

2.

101Compliance

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What are top issues compliance officers should address when using social media?Q:

Supervision

Compliance policies & procedures

Recordkeeping (including third party content)

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What are top compliance challenges advisors (or marketing staff) face when using social media? Q:

FINRA Advertising Regulations

Expediency

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Summing Up - 3 Rs:

Review content

Recordkeeping

Remove bad content

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How Finect helps you

Compliance officer may review, pre-approve content

Compliance officers remove bad content

Easy access records for all employees

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Static vs. InteractiveContent

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Static Content Interactive Content

• Remains posted until changed

by the firm or individual

• Accessible to all website visitors

• Ex: Blog posting

• Real-time communication

• EX: Chat room, In-mail

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Static Content Examples

Tweets-more flexible: interactive

Profile

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Static Content Examples

Personal bio

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Static Content Examples Wall post

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Interactive Content Examples

Inbox message

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Interactive Content Examples

Comments

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Interactive Content Examples

Like

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Interactive Content Examples

Re-tweet

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What are different compliance rules for static vs interactive content on social media?

Q: SEC guidance on websites Anti-fraud rules apply Advisers Act - Negligent

misstatements or omissions o Advisers Act Advertising

rules/testimonial rules Securities Act / Exchange Act State Securities Laws

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What are different strategies for writing static and interactive content on social media?Q:

Static: Time Relevancy

Interactive: Haters

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How does FINRA view social media? What actions are they taking? Q:

• FINRA: social media like a public presentation• Member firms have the same record keeping

and suitability obligations as with a public presentation

• Commendations may be recommendations • Registered principal pre-review any

recommendation• Interactive social media must be supervised on

a risk-based principle basis

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What do advisors need to know when preparing for FINRA Spot-Checks? Q:

Social Media Blotter

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How Finect helps you

Archives all social media content

Simple & easy to access records

CCOs to remove offending posts quickly & easily

CCOs to assign permissions to employees

Blog post approval process

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3.Frequently Asked

Questions

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What is the best practice for responding to negative comments? Q:

Take the high road – maintain a positive voice

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Are advisors responsible for client’s comments on his/her blog sites? Q:

Generally, no. But take care

Do not “adopt”

Do not “entangle ” yourself

FINRA strong on third party content as not a communication

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Where are sources of your social media (blog) content? Q:

Internal posts are driven by voracious reading and networking

Read Networking

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Strategies for firms or advisors using LinkedIn, Facebook & Twitter for business?

Q:

LinkedIn: Network/prospect and for job postings

Facebook: Business page ineffective seems geared to retail businesses

Twitter: Re-Tweet interesting articles instead of emailing

Google +: SEO impact solution

Don’t MixBusiness & Personal

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3 Things to Know

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Make it relevant

Simple “headlines”

Schedule your time

When a post links to third-party content, are firms responsible for that content (on linked sites)?

Q:1. FINRA: Depends on whether the company has (1) Involved itself in the preparation of the information or (2) Explicitly or implicating endorsed or approved the information

2. OICE guidance:(1) Reasonable safeguard to avoid violation(2) Address possible testimonials (3) Entanglement/adoption

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Will a LinkedIn “recommendation”, Facebook “Like” or Twitter “Re-tweet” violate the testimonial rule? Q:

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The SEC staff doesn’t “like” LinkedIn endorsement

Like - a grey area

Re-tweet – typically not a testimonial

Finect controls

If a post/blog draws regulatory scrutiny, do advisors have a defense if their firm can document a strong supervision process?

Q: Yes!

Supervision is a duty - “failure to supervise” is a violation

Adequate supervision is a defense for supervisors and firms

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Are there any limitations or challenges for advisors using social media when a conversation is supervised? Q:

Time Quality

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Should companies monitor employees’ personal social media accounts? In what situations? Q:

Yes

SEC does not accept personal capacities

Netflix case

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What should firms be careful about when monitoring personal social media accounts? Q:

We view Social Media no differently than we view normal regulatory supervision responsibilities.

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How Finect helps you

Track your employees on social media Social media manager system for CCOs to review what advisors or other staff share on social media

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How can companies successfully get their CCOs on board?Q:

5 steps – Show that…1. The social media site can be made compliant

2. The firm can control access to users

3. The content can be preserved & retrieved

4. Compliance resources to monitor the activities

5. A social media policy & procedure

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How can CCOs and marketing staff (or advisors) successfully work together? Q:

Communication Education

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Education

Improve workflow by:

Adopt appropriate tools

Train & educate employees

Create a social media policy

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4.Social Media Policy

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What are some key components of a good social media policy? Q:

Setting review process and time commitment – most people give up too soon

Decide which metrics you will use to evaluate

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What are the key regulatory requirementsfor a social media policy? 

Q:Questions to frame your approach

Can the firm control who has access?

Can the medium keep records of content?

Can records be deleted?

Can firm control who has permission to delete?

Can content be deleted?

Can the firm opt-in/out of functionality?

Can the firm control who can put up static content and document approvals?

Can the firm control who has access to interactive posting on the firm’s behalf?

Can the firm monitor Company sponsored activity in the medium?

Can the firm monitor its employees personal activity in the medium?

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What are the key regulatory requirementsfor a social media policy? 

Q:Questions to frame your approach

Can the firm post disclaimers in appropriate places as to:• Its own content• Third party hyperlinks• Third party posts

Has the firm considered and eliminated “red flags”?

If not Does a third party vendor offer a “filter” that could provide a compliance engine?

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What are the key regulatory requirementsfor a social media policy? 

Q:Assuming the firm gets to “yes” on the above:

Does the firm have the resources to discharge its compliance obligations?

Does firm have a compliance policy?

Does the firm have a training program?

Does the firm have an approved list of authorized users?

Has the firm considered potential conflicts of interest?

Monitoring program and record of results

Sanctions program

Annual certification of compliance by all employees and by authorized users.

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5.Training & Educating Employees

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At Morgan Stanley, advisors are allowed to use social media after training, and about 4,700 have been approved to do so.

At Wells Fargo’s financial advisor also received compliance and content training.

Real World Cases

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What are the top 3 compliance issues companies MUST educate their advisors about?  Q:

Educate, but don’t advise

No predictions; no commitments

Know what you don’t know.

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How can firms develop a social media training program for their staff? Q:

Weekly meetings that include business updates & social media updates

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How Finect helps you

Easy table for employees to view their social media permissions

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6.Cost of Compliance?

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What is the cost of your compliance?  Q:

Recordkeeping mechanism: record & retrieve site content

Non-compliance = the most costly

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What is the cost of your compliance?  Q: We are the CCO and

Compliance Officer for all of our partner firms

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How should a firm get started with compliant social media? Q:

Start with a platform that makes compliance easy

Install a system

Two choices :

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Q: How should a firm get started with compliant social media?

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Know you goals

Know your brand

Choose your platform

Measure results

4 Steps to Getting Started

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7.Any Questions?

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