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I’m excited to be in the last week before we get to Unleash 2013, Actiance’s inaugural User Summit, where we’ll be welcoming more than 150 clients, partners and friends from the industry to celebrate, discuss, and advance social business. I’m especially excited about the social track. (of course I would be with my focus on that particular area of our business!).
Now the full agenda can be found here and registration is open until Wednesday 14th May – so grab one of the few remaining seats while you still can. Why should you do that? Well you’ll love the social track that we’ve put together for starters. Here’s a taste of what you can experience:
Join the Social Stakeholders in our panel discussion because enabling Social in a financial services firm involves many aspects. Not least ensuring that all the stakeholders are involved – the earlier the involvement, the more successful the implementation of social tends to be. From Social Media and Digital Marketing, to Information Technology, Risk and Security, Compliance and HR – the enablement of social requires the buy in, education and advocacy of each of these departments and more. In this unique panel, we’ve brought together those stakeholders to guide you through the challenges – and give you key tips as to how you can safely and effectively navigate the successful implementation of social in YOUR organization.
- John Malone, Director of Broker Dealer Compliance, Pioneer Funds Distributor, Inc.
- Joe Correiro, Head of Digital Marketing, Bank of America Merrill Lynch
- Mitch Slater, SVP Financial Advisor, UBS Financial Services
Join us for what will be a lively discussion between interested stakeholders, with strong, but often opposing views and requirements and take away three key tips from each on effectively working with all the stakeholders involved in social enablement.
CIBC Wood Gundy began their journey towards building social into their business practice some two years ago. Hear from COO, Carole Foster, how the organization promoted the innovative use of technology to deliver social media to investment advisers as a key element in their communications tool kit. Understand the challenges that the firm overcame, the business drivers for the project and where the firm goes from here. Carole will share candid thoughts on how the stakeholders in her business came together to enable Wood Gundy to be the “first on the street” in Toronto to deliver social as a key element of the business and marketing mix for the wealth management community.
Finally – this conference is about you. Our customers, our users, our partners – so join “For the People, By the People: the Actiance Social UnConference”. We’ll gather for 90 minutes on Friday morning, with the Social UnConference, we have created a space that helps YOU make connections, share knowledge, collaborate and create brainchildren. This is your session – we encourage participants to give a presentation, create a discussion, or even chair a debate. Bring your ideas, your intellect, your debating skills – because there’s an entire room full of social individuals who WANT to hear your opinion and who want to engage with you.
The Social Business Team is counting down the hours to our kick off on Thursday 16th May – and we do hope you’ll join us for two days of engagement, interaction, sharing – and challenging of ideas. Hope to see you in New York!
Today’s blog is from Joanna Belbey, Social Media and Compliance Specialist at Actiance.
This month, the Division of Investment Management of the Securities and Exchange Commission issued the first in a series of “IM Guidance Updates” to clarify its positions on emerging legal issues. The first topic was social media.
Financial services firms are cautious by nature, and its both our experience and no surprise, that firms are taking a very conservative approach and are filing a huge amount of social media content with FINRA. The SEC is calling out that this may be unnecessary in a number of cases.
First some background. To ensure that communications from financial institutions are suitable, fair and balanced, the FINRA Advertising Regulation Department reviews the content of more than 100,000 communications every year. Some communications are submitted as required by FINRA rules, others are submitted voluntarily. Some are filed in advance, others within 10 days of publication. However in FINRA Rule 2210(c)(7)(M), effective February 2013, retail communications posted on an “online interactive electronic forum that is contained on a social media website” are specifically excluded from these filing requirements.
However, as firms have other filing requirements aside from FINRA, such as Section 24(b) of the Investment Company Act of 1940 (“1940 Act”) or Rule 497 under the Securities Act of 1933 (“1933 Act”), SEC has seen fit to provide guidance on what should and should not be filed.
As the SEC states “Whether a communication need be filed depends on the content, context, and presentation of the particular communication”. So nothing changes there. This is simply reiteration. But now the SEC goes a little further. The more specific, the more likely it needs to be filed. And as an aside, whether the communications are filed or not, they still need to captured, supervised, archived, made e-discoverable like any other written communication for “business as such”.
The SEC provided some examples for clarity:
Do Not File
- Simple mention of a specific investment company or family of funds without discussion of merits
- Mention of word “performance” in connection with a specific investment company or family of funds without mention of returns
- Factual introductory statement / hyperlink to fund prospectus (ie, report available here)
- An introductory statement not related to investment merits of a fund that includes hyperlink to general information
- Response to an inquiry via social media that provides factual information and does not include merits of the fund
File (to meet requirements of Section 24(b) or Rule 482):
- Discussion of fund performance that provides specific mention of fund’s returns
- Issuer communications that discuss merits of an investment fund
The regulators continue to reinforce what we know to be best practices of social media. Pitching financial products, and discussing specific performance and returns is unwelcome on social media and may require pre-approval by a registered principal of the firm as well as filing requirements.
A better approach?
Provide compelling content, not sales pitches. Offer information that is informative, entertaining, and worth sharing. In a compliance-constrained industry like financial services, delivering compelling content can be challenging, but it’s by no means impossible.
The first step is to inventory your existing content to see what can be leveraged for social media. Start with pre-approved content that has been reviewed by the company’s compliance team for both corporate governance and regulatory compliance. Use this content to develop a library of interesting insights on investment strategies, wealth management, saving for college or retirement, and similar topics. These articles can provide a foundation for social media newcomers who are looking to start building their online networks.
This Spring is a great time to get started!
Other information you may find helpful:
Belbey Blogs: New FINRA Communications Rule 2210
Division of Investment Management of the Securities and Exchange Commission Issues Guidance Update on Social Media Filings by Investment Companies
IM Guidance Update March 2013
FINRA Rule 2210
Regulatory Notice 12-29 Communications with the Public
Regulatory Notice 10-06, Social Media Web Sites: Guidance on Blogs and Social Networking Web Sites (January 2010)
Guide to the Web for Registered Representatives
FINRA: RCA – March 1999 – Ask the Analust – Electronic Communications
On February 4, 2013, as result of the systematic harmonization of NASD, NYSE and FINRA rules, FINRA Communications with the Rule 2210, went into effect. I wanted to learn more, so I attended the SIFMA Compliance and Legal Society, New FINRA Communications Seminar last week. It was an educational panel that include Kevin Zambrowicz (SIFMA), John Lajiness (Fidelity), Tom Pappas (FINRA), Holly Smith (Sutherland Asbill & Brennam) and Edward Sullivan (UBS).
The panel discussed that FINRA Rule 2210 brings some significant changes to the communications rule and that firms were expected to update their Written Supervisory Procedures accordingly. However, the rule was announced back in June, so firms have had plenty of time to get ready.
In fact, as Edward Sullivan, Head of Field Compliance at UBS, told the audience, his firm took the new rule as an opportunity to take a fresh look at the communications policies at his firm and make enhancements where appropriate.
So, how does FINRA Rule 2210 impact social media?
First some background. Back when FINRA issued Regulatory Notices 10-06 and 11-39, there were six major categories of communications under the existing NASD Rule 2210.The former six categories (advertisements, sales literature, correspondence, institutional sales material, independently prepared reprints, and public appearances) have now been replaced by three: Correspondence, Retail Communications, and Institutional Communications.
Let’s take a look at the two that impact social media:
Correspondence includes any type of written (including electronic) communication that is distributed or made available to 25 or fewer retail investors within any 30 calendar-day period. Like email, these communications do not require pre-approval, but, firms need to capture, retain and make business communications e-discoverable as well as demonstrate that they are supervising communications to meet suitability requirements. An example from social media might include an InMail on LinkedIn, a Message on Facebook, or a Direct Message on Twitter.
Retail communication includes any written (including electronic) communication that is distributed or made available to more than 25 retail investors within any 30 calendar-day period. A “Retail investor” includes any person other than an institutional investor, regardless of whether the person has an account with the firm. Communications that formerly qualified as advertisements and sales literature generally now fall under the definition of “retail communication.” These communications require pre-approval from a principal of the firm, plus all the record keeping and suitability rules apply. However, the rules specifically exempted pre-review any retail communication that:
- is posted on an online interactive electronic forum
- does not make any financial or investment recommendation or otherwise promote a product or service of the firm.
FINRA recognizes that due to the real time nature of social media, pre-review would inhibit interactive communications. Examples from social media include posts such as LinkedIn Updates, Facebook Status Updates, and Tweets on Twitter.
But, what about static portions of social media like profiles and links to content? Tom Pappas, Thomas A. Pappas, Vice President & Director, Advertising Regulation, FINRA, reiterated that the new rule codified existing guidance from 10-06 and 11-39 and that static portions of social media would still require pre-review unless they are exempted as above. In other words, if static content promotes a product or service, it requires pre-approval.
So, will this significantly change processes around social media? Probably not. As I mentioned in my blog, Belbey Blogs: What Are Other Firms Doing?, we have found that firms tend to pilot social media with pre-approval of all initial posts (such as tweets) and keep tight controls in place. Registered persons typically don’t have much latitude. However, once they begin to trust technology to safeguard their firms’ reputation and stay compliant, firms often begin to allow their reps to personalize content to varying degrees.
It just takes time. And some successes to accelerate the process.
For more information, see:
No matter what anyone tells you, you are never prepared for the Taj Mahal. We’ve all seen pictures of it of course. And we’ve heard the romantic story of how Mughal emperor Shah Jahan was so grief-stricken at the death of his third wife, he spent 22 years building a monument to her memory. But, what’s it like to visit?
First of all, it’s crowded. Lots of hustle-bustle getting tickets and walking through various lines and checkpoints, then suddenly, you are amidst a sea of people all crowded into a dark hallway.
Look up and there it is!
Then, everyone takes turns taking the classic “Couple Standing in Front of the Taj Mahal” shot.
Then a walk along a reflecting pond with stunning details.
Then taking off our shoes. Then lines.
And more lines.
And more lines.
White marble everywhere. It’s breathtaking of course, with stunning architectural details.
We’ve all seen those too.
But the part that no one ever tells you, is that everyone is so happy!
The Taj Mahal is more than a monument, it’s a living celebration.
In Shah Jahan’s words:
Should guilty seek asylum here,
Like one pardoned, he becomes free from sin.
Should a sinner make his way to this mansion,
All his past sins are to be washed away.
The sight of this mansion creates sorrowing sighs;
And the sun and the moon shed tears from their eyes.
In this world this edifice has been made;
To display thereby the creator’s glory.
When I first accepted my position at Actiance as the Social Media and Compliance Specialist, I was told that it was expected that I “friend” my manager and colleagues. Having come from FINRA, where we intentionally never “friended” each other on Facebook, the whole concept made me cringe. So I avoided it as long as I could. Finally I admitted my hesitation to a colleague, “I’m pretty goofy on Facebook” and she replied, “Don’t worry, we all are”. And by goofy, what I meant, is that I’m just my honest self. Movies that I like, events that I attend, great finds on shopping trips, photos of my bird, travel adventures, and even some silliness from time to time.
Her comment encouraged me to take the plunge. And you know what? Since then, I have really enjoyed learning about the personal lives of my colleagues. As I work remotely, Facebook has become my virtual water cooler. I learned about Sarah Carter’s passion for sailing in the freezing cold (brrr) or hurtling down a mountain in a bobslide at 80mph (yikes!), or about a Lisa Stokoe’s baking (yum) and sewing adventures, and even my shared passion for all things Star Trek, with Jeff Podraza.
Since then, I’ve even “friended” business associates and former colleagues. I now know a very serious financial services journalist loves her pugs, that an esteemed social media strategist, Augie Ray, is a movie buff like me, and that the chief compliance officer of a major broker dealer has a passion for fried food. I even went back and “friended” many of my colleagues at FINRA and was delighted to discover how multi-faceted they really are. Who knew?
For me, there really is no longer any bright white line between my personal and business life. And I think that’s the way the world is going. In my travels at Actiance, I hear many stories from clients whose financial advisors and agents use Facebook to initiate and nurture relationships with clients. After all, for them, life events (engagement, wedding, new baby, new job, illness, parents in assisted living, etc) are opportunities to provide more suitable product to their clients. And what better what to learn about the lives of your clients than on Facebook?
Learning about the personal lives of my colleagues, clients and business associates is highly entertaining and enhances my life every day. And I think it makes it easier to work together knowing that you have some common ground. After all, we all want to work with people we like, right?
Social Business GM, Sarah Carter contemplates commentary on liking and endorsements from the FINRA AdReg conference..
The rate of change on social networks and new features that might impact regulated users is always a great topic for conversation. And that topic was turned to several times here at the FINRA Advertising Regulation conference in Washington this week. In both social media compliance sessions and also the general session Q&A, attendees from the member firms wanted clarification on how FINRA views a couple of key elements of the social networks.
The first raised was LinkedIn endorsements – and you can read more about that feature here on LinkedIn’s blog. This new feature, launched during September of this year, has caused more than a little consternation amongst the regulated sector. In a previous blog entry, I noted how you might control and manage this. In one of the social media compliance session, Amy Sochard confirmed that these endorsements are indeed a testimonial if its referring to their skill as a broker.
We’ve also just touched on whether the use of the button on Facebook, which of course you need to do in order to follow a page -whether that’s a corporate or a business person page – means that you’re endorsing that page or adopting its content. No, is the answer. But that no comes with a comment – if you then go and like the comment (and this is the example from the conference) “Tom Pappas is best best rep in the world”, then of course that changes the rules, and that would be adoption of the content. And yes, that would be a problem.
It’s great to see more clarity from FINRA, and its great to see some of the folks up on stage – from Tom Pappas, Amy Sochard and Joe Price showing understanding not just of the challenges of social, but also why and how folks are using social media.
What were your thoughts on AdReg this year?