Jan 28th, 2010 |
What happens when an investor “friends” his broker or agent and they use Facebook chat or e-mail to discuss account activities? This sort of scenario sends shivers through the spine of those responsible for compliance in the financial services sector. We’ve seen a huge market develop around compliance enforcement for e-mail and IM, now those same concerns are extending into the social space.
FINRA, the Financial Industry Regulatory Authority, issued new guidelines this week designed to help financial firms balance the need to enter the social world with the need to meet electronic records retention rules. The problem for enforcement managers so far has been the lack of tools. While companies such as Facetime Communications have introduced social site enforcement gateways, it remains difficult to cover all the bases as social sites rapidly grow. Ultimately the heart of any successful compliance strategy is user training and a solid acceptable use policy for those accessing social sites. Financial firms would be wise to carefully read FINRA’s recommendations and proactively take measure to limit their risk.
FINRA Issues Guidelines for Social Media seems a new topic, isn’t it? i would like to hear more information.
The regulatory notice was new, but it did change the underlying regulations. FINRA has a Guide to the Internet for those subject to its rules. http://www.compliancebuilding.com/2009/02/12/finras-guide-to-the-internet/
The problem is that many types of communications require pre-approval, filing with FINRA and/or record-keeping. Those requirement match poorly with the way most social networking sites operate.
FINRA says too bad. If the technology can’t meet our requirement then you can’t use it. There is an opportunity for vendors to step in and help fill the gap. But the sites themselves will also need to adapt, moving from their cowboy attitude.
I would agree that the security gateway providers fall short in terms of covering all the bases. Firms or individuals interested in learning more should check out the Companion Guide to FINRA Social Networking Compliance http://bit.ly/8xT73y. It picks up where the recent FINRA notice leaves off, offering additional detail on social networking considerations and a checklist of requirements for choosing a social networking compliance vendor.