Joanna Belbey Presentations - BDI 7/12/12 Social Media Security & Compliance Workshop for Financial Institutions
Social Media Security & ComplianceJuly 12, 2012Joanna BelbeySocial Media and Compliance Specialisthttp://linkedin.com/in/belbeywww.facebook.com/#!/joanna.belbeyTwitter: @belbeyhttps://about.me/belbey
Agenda Introductions Changing landscape Social Media Maturity Curve Early successes Regulatory landscape 9 things you can do to get started Materials
Why are we presenting to you today?Joanna Belbey Social Media and Compliance Specialist FINRA Education Department Running training firm I help firms use social media while complying with the regulations Twitter: @belbey, @actiance LinkedIn: http://www.linkedin.com/in/belbey My biggest challenge?
About Actiance, Inc A decade of expertise, a history of firsts Global Operations • 3 US offices, three continents • 210 employees Dedicated Social Engagement Team • Partnering: networks, platforms, service providers • Regulators: FINRA, IIROC, FSA, SEBI… • Best Practice enablement, education Client Engagement • 9 out of the top 10 US Banks, Top 5 CDN Banks • 284 FINRA firms • 100,000 Social Networking users under license
Why Customers Select Actiance“We chose Actiance because they had the resources and partnering culture to help us with our long term strategy” – VP Technology, Interactive Marketing“Actiance’s platform allows us to execute our long term vision of integrating our internal social platforms with consumer networks” – SVP & CIO“Socialite Enable and Engage offer the best mix of compliance and marketing capabilities allowing our advisors to develop their personal brands” – Marketing Director
Internet Application Usage: Perception vs Reality Perception: 62% of IT Professionals estimated social networking was used within their corporate network Reality: 100% used social networking Perception: 60% of IT Professionals estimated IM was used on their network Reality: 98% used IMActual customer traffic history (150+ organizations)Representing all Internet activity from over 150K end users
Social media usage A majority of respondents indicate using social media for one or more business purposes. SOCIAL MEDIA USAGE For which of the following business purposes do you use social media today? Respondents under 35 are more likely to use social media for business purposes than those 55 or older (68% vs. 45%)Base: all respondents in 2012 (1,428) and 2011 (1,597); multiple responses.
Social Media Maturity Curve Early Majority Early Adopters • Corporate social presence • Corporate presence • Social media usage Early Consideration • Acceptable use policy by distributed teams • Some corporate advisors • Social media being presence used by distributed • Acceptable use policy Pre-Consideration • Banned/ restrictive teams/advisors • Next: use social policy in place • No social presence • Next: use social to to develop, strengthen • Pilot program for develop, strengthen relationships, for some • Restrictive social content distribution relationships, for also as a sales channel policy may be in place some also as a sales • No social tools • Previous concerns • Next: justify channel about FINRA and/ or • Need to: identify distributed teams impact of social media options, best practices usage overcome by market acceptance and demonstrable results.
Case Study: Wealth Management Firm (NJ)Outline Real Results LinkedIn Only LinkedIn Connection retirement status change = $2.75m account Listening is Key, watching acquisition connections who matter – Job Change noticed on Status Using Social as an integral element Update = 401k rollover of communications mix to spot change – FA obtains 400 new prospects in Energy market – New Commercial Account Opportunity through colleagues LinkedIn Connections
Case Study: RW BairdOutline Real Results LinkedIn Already Available to 1200 @MaryS_rwbaird Veteran Advisers, tech savvy – 51 followers Authentic Content – 93 Tweets (at the time) – $1m prospect
20% of enterprises that employ socialMedia beyond marketing will lead their industriesin revenue growth by 2015. GARTNER, MAY 2011
Why is social important in Financial Services?In the USA Gen Y accounts for $2.4 trillion worth of personal incomeIn 2025 Gen Y will account for 46% of personal incomeSource: Javelin Researchhttp://www.stltoday.com/business/local/article_719f49d8-15e6-5c5d-94b7-992ab12d9f97.html?print=1Based on 26,749 online adults, USA, Source: Forrester Research, June 2011
So who’s using Social Media? And Why? Sales & Marketing Promotions Advertising Branding Financial Advisors / Producers HR Background checks Recruiting Scientists & Researchers Information exchange Collaboration IT Investigation of security breaches
Risks of Using Social Media and Web 2.0 Data Leakage Incoming Threats Compliance & eDiscovery User BehaviorPersonal SEC, FINRA, IIROC EmployeeInformation Malware, Spyware Productivity HIPAA, FISMAIntellectual Property Viruses, Trojans Bandwidth SOX, PCI, FSACredit Card, Explosion InappropriateSSN FRCP- eDiscovery Content Every employee isClient Records FERC, NERC the face of business
Industry-Specific Legislation and Regulatory Bodies Fin Services Energy Healthcare Gov’t FINRA FERC HIPAA FRCP SEC NERC State of Oregon GLBA CFTC Florida GRS State of North SOX NFA Carolina Red Flag Rules
Key Legal Issues of Social Media Privacy Content Ownership Intellectual Property Infringement Unauthorized Activities • Harassment • Discrimination • Unfair competition • Defamation • Confidential info Regulatory Compliance
Types of financial advisors Registered Representatives Investment Advisors (Broker-Dealer)* (Registered Investment Advisor)* Regulated by FINRA and the SEC Regulated by SEC or state regulators Paid via commission Paid fee by client Suitability- recommendations must be Fiduciary responsibility – must place clients consistent with best interest of clients interests above own Ethics Legality Transactions Advice *Dually registered firms must adhere to both SEC and FINRA rules.
Financial Industry Regulatory Authority (FINRA) RegulatoryGuidance 10-06, 11-39Rule Description Best PracticeRecordkeeping Capture, save and make Third party vendor(s). easily available, all written business correspondenceSuitability Recommendations must be Prohibit recommending suitable for each investor specific products, investment strategiesCommunications with the Content standards, third party Disable the ability to makepublic standards, adoption and recommendations. Block entanglement retweet, “likeAdvertising Static v. interactive Pre-approval, post-reviewSupervision Demonstrate adherence with Follow risk-based written content standards supervisory procedures, trainingFINRA Regulatory Notice 07- Ethical walls between Restrict communications59 research and investment banking
New Regulatory Notices from FINRA Suitability (12-25) – effective 7/9/12 Investment Strategies Communications with the Public (12-29) – effective 2/4/13 3 categories (institutional, retail, correspondence) Exempts from pre-review: online interactive electronic forum not a financial or investment recommendation nor promotes a product or service of the firm
The Securities Exchange Commission (SEC) NationalExamination Alert Guidance Description Best Practice 13 factors to consider for Identify risks Consider pre-review of all effective compliance program content posted by IAs Third Party Content Possibly testimonials May need to re-evaluate separate professional pages Recordkeeping (Advisers Act) Capture, save and make Third party vendors easily available, all written business correspondence
Regulators and Social Media FINRA: RR Jenny Ta used Twitter to tout stock. Ta’s “tweets” were unbalanced, overwhelmingly positive and frequently predicted increases. Fined $10K and suspended for one year. SEC Division of Enforcement: Alleges that Anthony Fields of Lyons IL offered more than $500 billion in fictitious securities through various social media sites. FINRA exams: lists of RR using social media, checking against social media policy
9 steps to mitigate risks to deploy social media 1. Understand your firms landscape, get visibility. 2. Engage stakeholders in policy setting. Set the policy. 3. Consider and address the risks, in a granular fashion. 4. Protect your network from malware, phishing, attacks, data leakage 5. Issue and implement best practice guidelines. 6. Understand and manage the fallibility of human beings. 7. Record and retain (appropriate) communications. 8. Provide education for your users on acceptable and appropriate use. 9. Review and refine policies (regularly).
Contact Information email@example.com @Actiance, @belbeyFurther reading: Marketers Guide to Social Media in Financial Services FINRA 10-06 and11-39 requirements mapped to Facebook, LinkedIn, and Twitter features Social Media Handbook Osterman Research: The Impact of New Communication Tools for Financial Services Firms Actiance Collateral Library http://actiance.com/products/collateral- library.aspx