Maybe it is a sign of the Madoff times, but I can't help but shutter when I read comments from supposedly educated and experienced people who comment on rules and regulations. We all know that FINRA has released its social media guidelines. And we know that like most topics, there can be more than one opinion on the impact of new pronouncements.
Some think that the guidelines are too vague, and therefore meaningless. The vagueness that they are referring to is a desire to meet two goals - first to insure that new rules and regulations address a wide range of situations, and second, to allow firms to create their own supervisory system to meet the challenges of their particular mix of issues. For the inexperienced, bright line tests are better because they are easier. The experienced prefer principle-based regulation - tell me what you want to accomplish, and I will figure out the best way for me and my firm to get there.
But that claim of vagueness has led to another unfortunate, and potentially dangerous conclusion. From a legal blog today, talking about FINRA's social media guidelines:
Investing blogs seem to be eyeing the rules with a wary eye, but the consensus seems to be something a long the lines of "it's impossible for them to enforce this, and they're probably not going to be too aggressive anyway."
I hope that any financial professional who is guided by that statement has my business card on his desk. He is going to need it shortly.
FINRA is taking this seriously, and is already requesting documents regarding the use of Facebook, LinkedIn and Twitter. It is not impossible for them to monitor the use of social media, they will do so, and will seek sanctions for misuse.
7 comments:
I think people were expecting FINRA to come to them and tell them how to use social networking sites. Instead FINRA pointed out that their rules were in place first and that firms need to figure out how to use the social networking sites in compliance with the rules.
Enforcement is going to be really easy. Unlike with email and print publications, the auditor can just run a Google search and find the firm's postings on Facebook, Twitter, blogs and other. It's going to be an easy win for FINRA.
I agree Doug. The recommendation of treating real time updates like email, and profiles like web pages makes perfect sense, and the compliance systems should not be difficult to implement.
As you pointed out FINRA will have an easy time with enforcement, and I expect to see a number of investigations, simply to make the point. I reviewed many of the profiles of my LinkedIn connections who are advisers, and found issues on many of their profiles.
As you say, it is not too difficult for FINRA to find those same issues.
And they will..........
As usual finra will make a big deal out of twitter violations while ignoring billions in waste and fraud on the corporate side.
I would love to get some advisement about this FINRA and social media regulation.
How do you firms track the compliance?
How do they retain the communication across social media?
I am currently researching this situation to provide a tool which will monitor and archive online correspondence.
Thanks for pointing that out and I am pleased that you are are reading my posts so carefully.
Any comments on substance rather than a missed typo?
I agree. Ignoring FINRA would be a badddddd idea. Would you happen to have a link on FINRA's social Media Guidance - I have been trying to search for it for a research project on proposed guidance - can't seem to find it.
Also, similar to the guidance, do you think financial institutions should be forced to be proactive in defending customer's information on their hosted social media sites? E.g., a bank's facebook group membership being public allows for easier "vishing" to occur.
P.S. I didn't see any typos! :)
Post a Comment