Speak To A Live Person: 888.302.4594 Request A Demo

Social Media Policies for Investment Advisers

Monday, December 3, 2012

Blogs, Twitter, Facebook, LinkedIn, Google+, internet forums are all social media tools widely utilized in today’s technology age and a prevalent, almost expected, part of doing business and maintaining personal social connections. Businesses provide information about their company and services and clients and prospective clients have typically adapted to many forms of electronic media, and frequently use technology to research companies or individuals. Social media has become an integral part of modern society and a critical component of Investment Adviser compliance programs.

Social media content may be considered advertising or client correspondence, may inadvertently contain testimonials, investment advice, and may violate anti-fraud provisions or privacy regulations.

The SEC issued a National Examination Risk Alert, dated January 4, 2012, addressing the use of social media by Investment Advisers. While the SEC does not have specific regulation regarding the use of social media, Rules 206(4)-7 (Compliance Program), 206(4)-1 (Advertising), and 204-2 (Books and Records) are applicable.

Considerations: Investment Advisers need to be aware of their web presence, as well as the activities of their associated personnel, and incorporate social media into their policies and procedures. Although not an all-inclusive list, Investment Advisers should consider the following when evaluating its current social media usage and policies:

Advertising, Anti-Fraud Provisions, Testimonials, and Record Retention:

  • Websites, blogs, social media profiles, and status updates could be considered advertising and should be in compliance with advertising rules.
  • Comments responding to blog posts or status updates may be considered advertising or correspondence.
  • LinkedIn recommendations, Facebook “likes”, Twitter “Favorites”, Google+ “likes”, dependent on content, may be considered testimonials.
  • Record keeping obligations apply to any advertising and correspondence. Information available electronically must meet books and records retention rules.
  • What information is available about the Adviser, and associated persons, through non-related or third party sites?

Recommendations: Investment Advisers should review their current practices, written compliance policies and procedures, and evaluate whether they, or their personnel, utilize social media.

Written compliance policies and procedures should contain a precise and reasonably designed policy regarding social media use by the firm and associated personnel as well as methods for detecting and addressing violations. The policy may include a listing of authorized social media platforms and guidelines for the monitoring of information, updates, retention, and content. Advisers should address personal use of social media by employees including what information is authorized for use in personal profiles and guidelines or restrictions on content relating to the Adviser.

General best practices include:

  • Business Use: business email addresses, company information, social media profiles, etc. should be limited to business communications and reviewed as part of the compliance program.
  • Personal Use: prohibitions or limitations on the use of company email address, website address, and any marketing materials on personal profiles or blogs.
  • Restrictions or prohibitions on participation in business related internet chat rooms or forums.
  • Disclosure of social media use, training for personnel, and periodic acknowledgement or certification of the firm’s policies and procedures.

Additionally, it is recommended that Advisers review and monitor information available electronically via third parties and utilized by Solicitors. Information disseminated by third parties or solicitors may also be considered advertising or testimonials and need to be considered when creating and monitoring social media policies.

Click here for the full National Examination Risk Alert

About Red Oak Compliance Solutions

Red Oak Compliance Solutions is a leading provider of intelligent compliance software, offering a range of AI-powered solutions designed to help firms of all sizes successfully navigate the increasingly complex regulatory landscape. Our suite of 17(a)-4/WORM compliant features offer risk minimization, cost reduction, and process optimization capabilities with features that are designed to evolve with our client’s needs. Our flagship advertising review software enables firms to deliver compliant content to the market with confidence, faster. Our Disclosure Management and Intelligence solution simplifies the management of disclosures, while our Registration Management solution automates and streamlines the licensing and registration process, further enhancing your internal processes. 

  • Categories

  • Get Started