Oyster Consulting Blog

After years of waiting, Registered Investment Advisers no longer have to guess how the SEC views social media compliance. On January 4, the SEC released new guidelines designed to help RIAs adhere to the Advisers Act Rule 206(4) – 7 and federal securities laws, including the antifraud, compliance and recordkeeping provisions.

During their analysis, the SEC found that many firms had social media policies and procedures — but a number of them did not specifically outline permitted and prohibited social networking activities. Rather than providing hard-and-fast rules for effectively creating these guidelines — like FINRA has — the SEC offers 13 “non-exhaustive factors” RIAs may want to consider when creating their social media policies and procedures. After reviewing these topics, I’ve boiled each one down to the questions you should ask yourself to ensure your policies and procedures are sufficient.

Social Media Compliance Questions

1. Usage Guidelines: What sites and functions are approved? Which social media channels are firm representatives prohibited from using?
2. Content Standards: Will you provide content guidelines, prohibit certain types of content or enforce other restrictions?
3. Monitoring: How will you effectively monitor social media usage?
4. Frequency of Monitoring: After analyzing risks, how often will you monitor posted social media?
5. Approval of Content: Should you approve content before an employee posts it, rather than after the fact?
6. Firm Resources: Should you outsource social media monitoring? Or do you have adequate, informed resources in-house who can handle these responsibilities?
7. Criteria for Approving Participation: How will you determine which social media tools to allow?
8. Training: How will you train employees on your firm’s social media compliance?
9. Certifications: Will you require firm representatives to sign a pledge certifying they understand and will comply with your firm’s rules?
10. Functionality: How do each tool’s functions and policies affect users — and potentially open you and your clients to risk?
11. Personal/Professional Sites: On what sites may firm representatives conduct business? What information can they share?
12. Information Security: How will you protect sensitive data from hacking and other risks?
13. Enterprise-Wide Sites: If you are part of a larger organization, how can you ensure firm-wide social media complies with the Advisers Act?

In addition to answering these questions, you also need to ensure you are up to speed on third-party content and recordkeeping responsibilities.

If you’re unsure whether you are in compliance with social media requirements, or you don’t want to lose out on the potential value social networking can provide, call me at 804.965.5403 and we can talk about your questions and concerns. The Oyster team and I are here to provide sound advice and help make sure you — and your company — remain protected in your social media conversations.