Implementing Compliance Practices for Social Media, FINRA’s sequel to its Webinar held six weeks ago, took place this afternoon. Given that it attracted much less real-time attention (as monitored on Twitter) and that you’ll have to wait a few weeks to listen to the on-demand replay, we thought we’d go ahead and share some of the notes we took while listening. We’re not the keeper of the official minutes, remember; we don’t offer this as a full account of all that was discussed.
Vice President and Director of FINRA’s Advertising Regulation Department Thomas A. Pappas moderated what was mostly a panel discussion with compliance representatives from Bank of America Merrill Lynch (BAML) and New York Life Insurance Company (NYL). Bank of America the bank has been active for about two years in social media, the securities business (Merrill Lynch) not at all. New York Life just completed a three-month limited pilot program. The panelists were thoughtful and articulated the risks and policies, procedures and controls that needed to be established to participate in social media.
But, why didn’t the panel include representatives from companies that have implemented and are more fully participating in social media, my notes wondered.
The pilot described by New York Life Senior Vice President Joanne Rodgers included 25 agents and 25 recruiters using LinkedIn, Facebook and Twitter. Rodgers said the LinkedIn work, which involved the use of templated profiles with a pre-approved recruiting pitch, suggests that social network is “an ideal opportunity” for recruiting. But Rodgers was more tepid about in characterizing the agents’ involvement in the pilot. Most participated on Facebook and in more personal than business ways. She said the experience demonstrated that NYL will have to provide help for agents “navigating the forum.”
A discussion slide asked the question: Is Social Media Right For Your Firm? and we liked the way BAML Senior Vice President and Compliance Executive Douglas Preston deferred the question to the business’ role in determining that. Preston described an internal vetting process that includes requirements-gathering, a proof of concept and the securing of funding. “A number” of proof of concepts are being worked on right now in social networking, he said, including for the securities business (Merrill Lynch).
Rodgers expects social media to have staffing implications on sales literature review and the email monitoring group. Based on the Bank of America experience, Preston confirmed that social media monitoring and escalation requires “a lot of hands-on.” Training will be key, the panelists agreed. Rodgers talked at some length about working with a technology vendor to meet FINRA’s record-keeping and retention requirements.
Since the FINRA guidance was released on February 3, firms have been wrestling with how to distinguish between static versus interactive content. In fact, Pappas agreed that it will be “the toughest area.”
He said, “We have these broad categories but then there’s this gray area in the middle which is probably bigger than the two ends. That is going to be an issue we’re going to have to deal with.”
Other implementation updates:
- Firms are filing tweets as screenshots
- Firms are using disclaimers to distance themselves from third-party postings
- Firms are monitoring mentions of their firms’ names, in part to comply with regulations but also to guard against reputation risk
On Friday, May 7, Pat will be moderating a “Connecting Today: How Asset Managers Are Using Social Media and Why” session at ICI’s 2010 Operations and Technology Conference. Vanguard, Northern Trust and Stradley, Ronon Stevens & Young, LLP will be the panelists.
No related posts.
I’m baffled that firms use screenshots of tweets to generate compliance material. Capturing screenshots is a laborious process and requires far too many steps for it to be a practical archiving technique.
How do these firms expect to retrieve screenshots once an examiner requests them for a specific time period?
Here’s free tip: use http://www.tweetdoc.org to generate a PDF of recent tweets using your Twitter user name as the search criteria. It grabs re-tweets, too!
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Hi Bill, according to what FINRA Investment Companies Regulation Vice President Joseph P. Savage said yesterday, firms are creating screenshots and then converting them into .pdfs for electronic filing to FINRA’s Advertising Regulation Electronic Files system. (Scripts or other "clear and legible formats" would be acceptable, too, according to Savage, but he gave the impression that most tweets are being filed as screenshots.) There wasn’t any discussion about how the .pdfs were created.
I appreciate your stopping by to recommend the Tweetdoc Web site.
If a firm among our readers researches Tweetdoc, we’d love to hear back on whether it’s being incorporated as part of your archiving and filing process.
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Pat,
I enjoy how you synthesize and evaluate the information, rather than just presenting it in its raw state.
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Thanks for posting this recap as I missed the webinar yesterday.
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Is socialware another option for this compliance concern?
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Thank you, Susan and Adam. I’ve since seen a summary on Beacon Capital Partners’ Compliance Officer Doug Cornelius’ site and on technology vendor SocialWare’s site.
John, SocialWare and Arkovi are two companies that I’m aware of that provide social media archiving but you’d have to ask each of them if they provide support for filing tweets. Thanks for stopping by.
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Thanks for the mention John.
Couple of thoughts on the discussion here. Using screenshots to submit compliance material is one thing, relying on screenshots as your mechanism to track the data is yet another (way too risky and incomplete). Screenshots are only taken at periodic intervals which leads to issues around getting all the data. On top of that you can’t search & discover content in screenshots. Last if you are a large firm this won’t even come close to satisfying all of your social networking compliance requirements.
As the solutions around social networking compliance evolve I think you are going to start seeing a variety of options. For example, Socialware now offers a pure social media archiving solution, called Sync http://bit.ly/ceEUsq. This is designed for individuals or small firms that just need to archive their data to ensure compliance. The second option is a full social networking policy management solution, called Compass http://bit.ly/dlbUAV (formerly known as Risk Manager). This solution is more appropriate for medium to large firms who need archiving + access control for features on social networking sites, real-time content moderation, keyword scanning, integration to backend systems (email archiving, LDAP, etc), search and discovery and enterprise-wide analytics on usage.
If you are looking for more information on the FINRA guidelines here are a few resources:
Companion Guide to FINRA/SEC Social Networking Compliance: http://bit.ly/agxEeo
FINRA Social Networking Compliance Webinar #1 Recap: http://bit.ly/8XK7IZ
FINRA Social Networking Compliance Webinar #2 Recap: http://bit.ly/c67guQ
Hope this helps.
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You can see the theme in the comments response – screen shots and manual capturing and archiving is not only unproductive but not extensible or flexible. Consider the analogy of archivists capturing documents, photographs and the like in the offline world – they are preserved for later review, duplication, reuse and used in various consumer and business processes.
Likewise, archiving in the digital world is about capturing a live interactive archive across many platforms – not screenshots and non-searchable content. For firms and business to implement social media as a communications and marketing tool – that archiving should be a “set it and forget” always on service.
I applaud that both regulatory organizations and leaders in the industry have recognized the value and scale of social media – and are seeking to work out guidance, strategy and tactics to use it productively.
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I listened to the webinar and found your comments to be right on target. I was disappointed that these industry people were the ones that were talking, since others (Vanguard, Fidelity, etc.) seem much more active in this space. From what I understood, NYL was mostly tracking what a few reps were doing in the social web, not really providing a program for them. NYL seemed more interested in the use of LinkedIn for recruitment of reps.
I have been following the FINRA and social media issues for a while and put together a white paper (FREE) for anyone who is interested. http://su.pr/2Kb2RE
Keep up the good work on reporting on these issues.
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John, Blane and Catherine, thank you for continuing the discussion here about investment company social media participation and evolving archiving practices.
In addition to Catherine’s awesome whitepaper, I’ve since become aware of Triplestop’s FINRA Social Cheat Sheet.
With so many great minds focused on the topic, we are optimistic about the social media experimentation about to emerge from FINRA-regulated companies!
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