Reading third-party comments to blogs, Facebook posts, and group discussions is oftentimes more amusing that than the original piece of content that got the ball rollin’ in the first place. Sarcastic comments, witty repartee, and timely humor are standard fodder for many social media sites. Of course, not all’s a laughing matter, especially when it comes to FINRA-related content on social networks like Facebook, LinkedIn, and Twitter.
Financial advisers are keen to use these sites to prospect for new customers or to strengthen existing relationships. There’s no disputing that. However, things get a somewhat murky when an adviser responds to a third-party post (we’ll call this a “3PP” from here on out) to his or her, say, Facebook page. Whether it’s an outright comment to a 3PP or a “Like”, FINRA may consider this an endorsement of the 3PP, which would require pre-approval by a firm principal.
FINRA’s “entanglement” and “adoption” theories rear their heads in situations like these. The way FINRA sees it, if the firm or one of its personnel paid for or was involved in the preparation of the 3PP prior to its posting, then the 3PP would be considered a “communication with the public” that requires pre-approval (under the entanglement theory). If the firm or one of its personnel “explicitly or implicitly endorses or approves” the 3PP, then it requires pre-approval under the adoption theory. This means advisers have to be very careful before pushing that “Like” button on LinkedIn or Facebook pages.
The speed at which social networks release new features (e.g., Like, Recommendation, Retweet, etc.) is phenomenal. During March 2011, LinkedIn made 74 changes. 74!!! It’s enough to cause a few palpitations amongst the compliance community. The role of the compliance team is made that much more complicated (and stressful) by the amount of internal pressure they receive from some groups that need access to these social media sites….for absolutely legitimate reasons. On the other hand, you’ve got the watchful eyes of FINRA regulators circling the waters.
That’s why social media monitoring and archiving initiatives have been emerging in financial institutions in recent months. Whether you’re a Goldman Sachs, an investment advisory firm, or a small hedge fund, the need to manage social media content remains a constant, regardless of the perpetual change. And, as firms move towards realizing the benefits of social media and Web 2.0, they’ll need to straighten out the tangles of the social Web.