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.