FWA.org Joyce Sullivan Board Director, Financial Women’s Association Co-Founder, FWA Communications & Digital Media Twitte...
<ul><li>The Financial Women’s Association is the leading professional organization that connects, educates and advances wo...
<ul><li>Agenda </li></ul><ul><li>Background </li></ul><ul><li>Regulations </li></ul><ul><li>Best Practices </li></ul><ul><...
<ul><li>FINRA Regulatory Notice 10-06 </li></ul><ul><li>The Financial Industry Regulatory Authority (FINRA) provided its f...
<ul><li>FINRA Classification of Social Networking Activities </li></ul><ul><li>Is it…? </li></ul><ul><li>- Public Appearan...
<ul><li>Supervision and Monitoring </li></ul><ul><li>Firms must establish policies that are reasonably designed to ensure ...
<ul><li>Recordkeeping Requirements </li></ul><ul><li>What records are required to be kept in social media activities </li>...
FINRA Regulatory Notice 10-06 Guidelines for Social Networks @joycemsullivan Regulation Social Network and Web 2.0 Impact ...
Ensuring regulation is met, reducing risk @joycemsullivan Issue Control Requirement Identity Management Ensure that all th...
Possible interpretations for FINRA regulations impact on Social Media Sites: Facebook / LinkedIn / Twitter @joycemsullivan...
Working with Your Legal and Compliance Department Don’t assume your legal and compliance colleagues.. - “get it” or immedi...
<ul><li>Best Practices </li></ul><ul><li>DO </li></ul><ul><li>Discuss macro economic concepts </li></ul><ul><li>Discuss va...
FINRA Advertising Compliance Resource http://www.finra.org/Industry/Issues/Advertising/index.htm <ul><li>Compliance Consid...
<ul><li>How to Get Started </li></ul><ul><li>Look for opportunities to introduce social communications  </li></ul><ul><ul>...
FWA.org Joyce Sullivan Board Director, Financial Women’s Association Co-Founder, FWA Communications & Digital Media Twitte...
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Joyce Sullivan Social Media FINRA Guidance: Net Finance Conference, May 17, 2011 Chicago USA

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Joyce Sullivan speaks at Net.Finance conference, Chicago, May 17 2011 on Social Media and FINRA Guidance

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Joyce Sullivan Social Media FINRA Guidance: Net Finance Conference, May 17, 2011 Chicago USA

  1. 1. FWA.org Joyce Sullivan Board Director, Financial Women’s Association Co-Founder, FWA Communications & Digital Media Twitter @fwany @joycemsullivan Net.Finance Conference Chicago, USA May 16-18 2011 Social Media and FINRA Regulation Navigating the Social Networking Regulatory Requirements in the Financial Industry
  2. 2. <ul><li>The Financial Women’s Association is the leading professional organization that connects, educates and advances women in business and finance. </li></ul><ul><li>Founded in 1956 </li></ul><ul><li>8 women on Wall Street met to share professional experiences </li></ul><ul><li>Non-profit organization </li></ul><ul><li>Leadership development / mentoring / financial literacy / microfinance </li></ul><ul><li>Financial services professional development / industry advocacy </li></ul><ul><li>1,000 members worldwide / senior leaders - women and men </li></ul><ul><li>120 Events held annually </li></ul>Off the Job Training for On the Job Success http://fwa.org @fwany @joycemsullivan
  3. 3. <ul><li>Agenda </li></ul><ul><li>Background </li></ul><ul><li>Regulations </li></ul><ul><li>Best Practices </li></ul><ul><li>Teamwork </li></ul><ul><li>Resources </li></ul>@joycemsullivan
  4. 4. <ul><li>FINRA Regulatory Notice 10-06 </li></ul><ul><li>The Financial Industry Regulatory Authority (FINRA) provided its first high level industry guidance for social media activities for investment broker dealer firms </li></ul><ul><li>It provided no specific rule changes, but offered clarification in a Q & A format. </li></ul><ul><li>Summary Highlights </li></ul><ul><li>Record Keeping Responsibilities </li></ul><ul><li>Suitability Responsibilities </li></ul><ul><li>Types of Interactive Electronic Forums </li></ul><ul><li>Supervision of Social Media Sites </li></ul><ul><li>Third Party Posts </li></ul>@joycemsullivan Source: FINRA NTM 10-06
  5. 5. <ul><li>FINRA Classification of Social Networking Activities </li></ul><ul><li>Is it…? </li></ul><ul><li>- Public Appearance </li></ul><ul><ul><li>Advertisement </li></ul></ul><ul><ul><li>Correspondence </li></ul></ul><ul><li>It depends… </li></ul><ul><li>Public Appearances are unscripted participation in an interactive forum such as a chat room or online seminar </li></ul><ul><li>Advertisements are the static written content available for access online. This includes the static content on a blog, FaceBook profile, Twitter profile and LinkedIn profile. Profile includes any background or wall information posted. </li></ul><ul><li>Correspondence would be email communications that are sent one-on-one through the email system of social media sites. </li></ul><ul><li>The different classifications affect whether or not it requires Registered Principal pre-approval, post-monitoring or possible marketing filings with FINRA. </li></ul><ul><li>Source: FINRA NTM 10-06 </li></ul>@joycemsullivan
  6. 6. <ul><li>Supervision and Monitoring </li></ul><ul><li>Firms must establish policies that are reasonably designed to ensure their social media activities do not violate general rules outlined in Regulatory Notice 07-59 </li></ul><ul><li>General Requirements </li></ul><ul><li>Written policy and procedures that are disseminated throughout the firm </li></ul><ul><li>Identify what types of communications require review </li></ul><ul><li>Identify which persons are responsible for supervision. This should include business employees because certain functions may be performed by non-compliance employees. </li></ul><ul><li>Outline the method of review </li></ul><ul><li>Frequency of the review </li></ul><ul><li>Documentation that reviews were carried out </li></ul><ul><li>Conduct compliance training </li></ul><ul><li>Identify how complaints are handled </li></ul><ul><li>Identify which employees have access to social media sites via the firm’s network </li></ul><ul><li>Continually evaluate social media activities for compliance </li></ul><ul><li>Source: FINRA NTM 07-59 </li></ul>@joycemsullivan
  7. 7. <ul><li>Recordkeeping Requirements </li></ul><ul><li>What records are required to be kept in social media activities </li></ul><ul><ul><li>Static Postings </li></ul></ul><ul><ul><li>Discussion threads </li></ul></ul><ul><ul><li>Third Party Postings </li></ul></ul><ul><li>For FINRA member broker dealers: </li></ul><ul><ul><li>3 years with the last 2 years in an easily accessible place </li></ul></ul><ul><ul><li>[FINRA Rule 2210 (b)(2)(A) and 3110] </li></ul></ul><ul><li>For SEC registered investment advisors: </li></ul><ul><ul><li>5 years with the last 2 years in an easily accessible place </li></ul></ul><ul><ul><li>[SEC Rule 17a-3 and 17a-4 of the ‘34 Act] </li></ul></ul><ul><li>Regulators do not endorse any particular record keeping technology or vendor, nor acknowledges that there are adequate technologies that exist. </li></ul><ul><li>Source: FINRA NTM 07-59 </li></ul>@joycemsullivan
  8. 8. FINRA Regulatory Notice 10-06 Guidelines for Social Networks @joycemsullivan Regulation Social Network and Web 2.0 Impact SEC Rules 17a-3 and 17a-4 and NASD rule 3110 Retain records of communications related to business Public Appearances Electronic forums and chat rooms, content posted to social media may constitute a pubic appearance Prior Approvals Wall postings require prior approval Participation Real time participation on social networks equals participation FINRA Regulatory Notice 07-59 For instance, communications between research and investment banking departments should be restricted Restrict personnel Only those subject to firm’s supervision should have access, providing training prior to engagement, prohibit or restrict those who pose a compliance risk. Restrict access with technology
  9. 9. Ensuring regulation is met, reducing risk @joycemsullivan Issue Control Requirement Identity Management Ensure that all the different logins of an individual link back to corporate identity Activity control Posting of content allowed for marketing but read-only for everyone else Granular application control Employees can access Facebook but not Facebook chat or Facebook games Anti-malware Protect network against hidden phishing or Trojan attack Data leak prevention Protect organization from employees disclosing sensitive information Moderation Messages posted only upon approval by designated officer Logging and archiving Log all content posted to social networks Export of data Export stored data to any email archive or WORM storage
  10. 10. Possible interpretations for FINRA regulations impact on Social Media Sites: Facebook / LinkedIn / Twitter @joycemsullivan Rule or Notice Summary of rule or notice Facebook Features Impacted LinkedIn Features Impacted Twitter Features Impacted FINRA Regulatory Notice 10-06 (Guidance for social media web sites) Allows for registered representatives to participate in real-time communications, but care still needs to be given to the content of the message. In interactive electronics forums, such as chat rooms, prior approval of extemporaneous remarks isn’t required <ul><li>Profile </li></ul><ul><li>Chat </li></ul><ul><li>Compose Message </li></ul><ul><li>Status update </li></ul><ul><li>Wall postings </li></ul><ul><li>Upload photos </li></ul><ul><li>Upload video </li></ul><ul><li>Like </li></ul><ul><li>Profiles </li></ul><ul><li>Group discussions </li></ul><ul><li>Share an update </li></ul><ul><li>Send a message </li></ul><ul><li>Recommendations </li></ul><ul><li>Replies </li></ul><ul><li>Profile </li></ul><ul><li>Tweets </li></ul><ul><li>Retweets </li></ul><ul><li>Replies </li></ul>FINRA Regulatory Notice 07-59 (Conflicts of Interest) Members should take steps to reduce, manage, or eliminate potential conflicts of interest, to prevent electronic communications between certain individuals/groups or monitoring communications as required by FINRA rules. <ul><li>Profile </li></ul><ul><li>Chat </li></ul><ul><li>Compose Message </li></ul><ul><li>Status update </li></ul><ul><li>Wall postings </li></ul><ul><li>Upload photos </li></ul><ul><li>Upload video </li></ul><ul><li>Like </li></ul><ul><li>Profiles </li></ul><ul><li>Group discussions </li></ul><ul><li>Share an update </li></ul><ul><li>Send a message </li></ul><ul><li>Recommendations </li></ul><ul><li>Replies </li></ul><ul><li>Profile </li></ul><ul><li>Tweets </li></ul><ul><li>Retweets </li></ul><ul><li>Replies </li></ul>
  11. 11. Working with Your Legal and Compliance Department Don’t assume your legal and compliance colleagues.. - “get it” or immediately think it’s a cool idea - understands social media concepts or even likes it - understands your social media business plans - are fully versed in social media regulations Do: - start with the basics in educating them on social networking sites - provide them with a comfort level with the technology - provide them with articles and research related to social media compliance - inform them what your competitors are doing in this space - invite the tech department to be part of the conversation - propose running a pilot project to test the waters - internal test with other employees (intranet) - external test with selected pilot clients @joycemsullivan
  12. 12. <ul><li>Best Practices </li></ul><ul><li>DO </li></ul><ul><li>Discuss macro economic concepts </li></ul><ul><li>Discuss various sectors or industries </li></ul><ul><li>Discuss retirement concepts </li></ul><ul><li>Educate the public on financial markets and products </li></ul><ul><li>Post company non-product or services related announcements </li></ul><ul><li>Post messages that have a broad appeal (i.e. charity events or good will activities) </li></ul><ul><li>Post generic responses to third-party postings </li></ul><ul><li>DON’T </li></ul><ul><li>Mention individual stocks or investment names </li></ul><ul><li>Provide investment advice </li></ul><ul><li>Promote your products and services </li></ul><ul><li>Make provocative or promissory statements regarding direction of the markets or price of commodities </li></ul><ul><li>No retweets on Twitter </li></ul><ul><li>No ‘Likes’ on Facebook </li></ul><ul><li>No unauthorized employee postings </li></ul>@joycemsullivan
  13. 13. FINRA Advertising Compliance Resource http://www.finra.org/Industry/Issues/Advertising/index.htm <ul><li>Compliance Considerations for Social Networking Sites Webinar - On Demand </li></ul><ul><li>Implementing Compliance Practices for Social Media - On Demand </li></ul><ul><li>What to Expect: Filing Communications for FINRA Review - Webcast </li></ul><ul><li>Guide to the Internet for Registered Representatives </li></ul><ul><li>Online Advertising Report </li></ul><ul><li>Advertising Regulation Electronic Files </li></ul><ul><li>SIPC Information </li></ul><ul><li>529 College Savings Plans </li></ul><ul><li>Member Alerts (2007-2001) </li></ul><ul><li>Regulatory & Compliance Alert Article Reference Guide </li></ul><ul><li>Member Update - NASD Review of Hedge Fund Advertising Results in Formal Action </li></ul><ul><li>Advertising Regulation – Notices by Year 2011-1996 </li></ul><ul><li>Advertising-Related News Releases by Year 2011-2002 </li></ul><ul><li>Advertising-Related Interpretive Letters </li></ul><ul><li>Advertising-Related Investor Alerts </li></ul>@joycemsullivan
  14. 14. <ul><li>How to Get Started </li></ul><ul><li>Look for opportunities to introduce social communications </li></ul><ul><ul><ul><li>Event promotion, internal networking </li></ul></ul></ul><ul><li>Embrace your existing audience / members </li></ul><ul><ul><li>Look at staff / members backgrounds for areas of interest </li></ul></ul><ul><li>Seek out and invite ‘early adopters / eager learners’ to join movement </li></ul><ul><ul><li>Personally invite individuals to join your “working group” </li></ul></ul><ul><li>Nurture top leaders / influencers to become conversant in social tools </li></ul><ul><ul><li>It’s lonely at the top! Help a Financial Services Leader Learn Social Today! </li></ul></ul><ul><li>Become working partners with your legal and compliance teams </li></ul><ul><ul><li>Work with your legal and compliance partners in this evolving space </li></ul></ul><ul><li>Start small – Pilot test with select audience </li></ul><ul><ul><li>Celebrate early successes </li></ul></ul><ul><ul><li>Advertise internally / externally social milestones </li></ul></ul><ul><li>Continue to advocate / Change when needed </li></ul>@joycemsullivan
  15. 15. FWA.org Joyce Sullivan Board Director, Financial Women’s Association Co-Founder, FWA Communications & Digital Media Twitter @fwany @joycemsullivan Net.Finance Conference Chicago, USA May 16-18 2011 Social Media and FINRA Regulation Navigating the Social Networking Regulatory Requirements in the Financial Industry Questions? Thank you!

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