Financial Services and Social Media presentation to Edelman NYC by Joyce Sullivan, Founder & CEO, SocMediaFin; March 29, 2012

1. Exclusive Presentation for:
250 Hudson St – 16th floor (PH)
New York, NY USA
Thursday, March 29, 2012
2:00-3:00 pm EDT
Financial Services and Social Media
Created and Presented by:
Joyce Sullivan
CEO | Founder
SocMediaFin.com

2. Exclusive Presentation for:
250 Hudson St – 16th floor (PH)
New York, NY USA
Thursday, March 29, 2012
2:00-3:00 pm EDT
Financial Services and Social Media
AGENDA:
2:00 – 2:05 overview and introductions
2:05 – 2:10 financial services and social media use
2:10 – 2:15 industry trends
2:15 – 2:25 USA: SEC and FINRA compliance and regulation update
UK, Canada: social media regulation and financial services
2:25 – 2:30 compliant use of LinkedIn, Facebook, Twitter and more…
2:30 – 2:35 who owns social in financial services firms?
2:35 – 2:40 what’s next for financial services and social media use
2:40 – 2:50 discussion and questions
Created and Presented by:
Thank you! Joyce Sullivan
CEO | Founder
SocMediaFin.com

3. Visit us > SocMediaFin.com
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4. Visit us > SocMediaFin.com 4

5. 5
SXSW 2012 Financial S

6. Social Media Strategy for Financial Services
for US Firms
 Can you use social media in financial services?
 What are the rules?
 The Fun stuff: FINRA, SEC and other regulatory guidance
 Why are some firms using social media and others are
not?
 What can you do to bring Social Media to your
organization
 Next Steps to make it happen
@JoyceMS
ullivan
@SocMedi
aFin

7. US Industry Trends: Shrinking and Growing Industries 2007 - 2
Council of Economic Advisors, February 2012 report
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8. US Industry Trends: Shrinking and Growing Industries 2007 - 2
Council of Economic Advisors, February 2012 report
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9. Who are you?
Social Media Strategy for Financial Services
 New graduate joining a financial services firm
 Moving from another industry that used social media extensively
 Public Relations firm with financial services clients
 Advertising firm working with financial services
 External Legal or Compliance firm working with financial services firms
 Internal Legal or Compliance firm supporting line of business
 Sales or Marketing department who want to use social media to increase
sales
 Senior Leaders wondering if you should get into social media
 Your new hires have ideas to grow the business using social media

10. FINRA Regulatory Notice 10-06
In January, 2010, The Financial Industry Regulatory Authority (FINRA)
provided its first high level industry guidance for social media activities for
investment broker dealer firms.
10-06 provided no specific rule changes, but offered clarification in a Q & A
format.
Summary Highlights
 Record Keeping Responsibilities
 Suitability Responsibilities
 Types of Interactive Electronic Forums
 Supervision of Social Media Sites
 Third Party Posts

11. @JoyceMS
ullivan
@SocMedi
aFin

12. FINRA Regulatory Notice 10-06
@JoyceMS
ullivan
@SocMedi
aFin

13. FINRA Regulatory Notice 11-39
In August 2011, The Financial Industry Regulatory Authority (FINRA) provided
clarification of 10-06 guidance for social media activities for
investment broker dealer firms with focus on:
- Social media websites
- Use of Personal Devices for Business Communications
11-39 Summary Highlights
 Communication content is determinative; not the communication channel
 A Firm is subject to the “adoption” and “entanglement” theories regarding
third party posts (Retweets, LIKES, of others’ content)
 Business communications through personal devices must be supervised and
recorded
@JoyceMS
ullivan
@SocMedi
aFin

14. @JoyceMS
ullivan
@SocMedi
aFin

15. FINRA Regulation 11-39
@JoyceMS
ullivan
@SocMedi
aFin

16. Securities & Exchange Commission (SEC)
National Examination Risk Alert
In January 2012, The SEC issued their observations related to the use of
social media by registered investment advisers
Key Takeaways: Investment advisers that use or permit the use of social
media by their representatives, solicitors and/or third parties should
consider periodically evaluating the effectiveness of their compliance
program as it relates to social media. Factors that might be considered
include usage guidelines, content standards, sufficient monitoring,
approval of content, training, etc. Particular attention should be paid to
third party content (if permitted) and recordkeeping responsibilities.

17. SEC Investment Adviser Use of Social Media

18. 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 – recommendation must Fiduciary responsibility – must
be consistent with best interest of place clients interest above own
client
Ethics Legality
Transactions Advice
*Dually registered firms must adhere to both SEC and FINRA rules

19. FINRA Classification of Social Networking Activities
Is it…?
- Public Appearance
- Advertisement
- Correspondence
It depends…
 Public Appearances are unscripted participation in an interactive forum such as a
chat room or online seminar
 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.
 Correspondence would be email communications that are sent one-on-one through
the email system of social media sites.
 The different classifications affect whether or not it requires Registered Principal
pre-approval, post-monitoring or possible marketing filings with FINRA.
Source: FINRA NTM 10-06 @joycemsullivan

20. Supervision and Monitoring
 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
General Requirements
4.Written policy and procedures that are disseminated throughout the firm
5.Identify what types of communications require review
6.Identify which persons are responsible for supervision. This should include business
employees because certain functions may be performed by non-compliance employees.
7.Outline the method of review
8.Frequency of the review
9.Documentation that reviews were carried out
 Conduct compliance training
 Identify how complaints are handled
 Identify which employees have access to social media sites via the firm’s network
 Continually evaluate social media activities for compliance
Source: FINRA NTM 07-59
@joycemsullivan

21. Recordkeeping Requirements
 What records are required to be kept in social media activities
 Static Postings
 Discussion threads
 Third Party Postings
 For FINRA member broker dealers:
 3 years with the last 2 years in an easily accessible place
[FINRA Rule 2210 (b)(2)(A) and 3110]
 For SEC registered investment advisors:
 5 years with the last 2 years in an easily accessible place
[SEC Rule 17a-3 and 17a-4 of the ‘34 Act]
 Regulators do not endorse any particular record keeping technology or vendor, nor
acknowledges that there are adequate technologies that exist.
Source: FINRA NTM 07-59
@joycemsullivan

22. FINRA Regulatory Notice 10-06
Guidelines for Social Networks
Regulation Social Network and Web 2.0 Impact
SEC Rules 17a-3 and Retain records of communications related to business
17a-4 and NASD rule 3110
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 For instance, communications between research and investment
07-59 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
@joycemsullivan

23. Possible interpretations for FINRA regulations impact on
Social Media Sites: Facebook / LinkedIn / Twitter
Rule or Notice Summary of rule or notice Facebook LinkedIn Twitter
Features Features Features
Impacted Impacted Impacted
FINRA Allows for registered representatives to • Profile • Profiles • Profile
Regulatory participate in real-time • Chat • Group discussions • Tweets
Notice 10-06 communications, but care still needs to • Compose Message • Share an update • Retweets
(Guidance for be given to the content of the message. • Status update • Send a message • Replies
social media In interactive electronics forums, such • Wall postings • Recommendations
web sites) as chat rooms, prior approval of • Upload photos • Replies
extemporaneous remarks isn’t required • Upload video
• Like
FINRA Members should take steps to reduce, • Profile • Profiles • Profile
Regulatory manage, or eliminate potential conflicts • Chat • Group discussions • Tweets
Notice 07-59 of interest, to prevent electronic • Compose Message • Share an update • Retweets
(Conflicts of communications between certain • Status update • Send a message • Replies
Interest) individuals/groups or monitoring • Wall postings • Recommendations
communications as required by FINRA • Upload photos • Replies
rules. • Upload video
• Like
@joycemsullivan

24. 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

25. Best Practices
DO
3.Discuss macro economic concepts
4.Discuss various sectors or industries
5.Discuss retirement concepts
6.Educate the public on financial markets and products
7.Post company non-product or services related announcements
8.Post messages that have a broad appeal (i.e. charity events or good will activities)
9.Post generic responses to third-party postings
DON’T
12.Mention individual stocks or investment names
13.Provide investment advice
14.Promote your products and services
15.Make provocative or promissory statements regarding direction of the markets or price of
commodities
16.No retweets on Twitter
17.No ‘Likes’ on Facebook
18.No unauthorized employee postings
@joycemsullivan

26. FINRA Advertising Compliance Resource
http://www.finra.org/Industry/Issues/Advertising/index.htm
 Compliance Considerations for Social Networking Sites Webinar - On Demand
 Implementing Compliance Practices for Social Media - On Demand
 What to Expect: Filing Communications for FINRA Review - Webcast
 Guide to the Internet for Registered Representatives
 Online Advertising Report
 Advertising Regulation Electronic Files
 SIPC Information
 529 College Savings Plans
 Member Alerts (2007-2001)
 Regulatory & Compliance Alert Article Reference Guide
 Member Update - NASD Review of Hedge Fund Advertising Results in Formal Action
 Advertising Regulation – Notices by Year 2011-1996
 Advertising-Related News Releases by Year 2011-2002
 Advertising-Related Interpretive Letters
 Advertising-Related Investor Alerts
@joycemsullivan

27. Questions
?
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28. Thank you!
Connect with me!
LinkedIn: http://linkedin.com/in/joycemsullivan
Website: http://socmediafin.com
Twitter: http://twitter.com/joycemsullivan
Google+: Joyce Sullivan on Google Plus
Facebook: SocMediaFin, Inc on Facebook
CNBC TV:
Joyce Sullivan on WSJR with Maria Bartiromo
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29. Exclusive Presentation for:
250 Hudson St – 16th floor (PH)
New York, NY USA
Thursday, March 29, 2012
2:00-3:00 pm EDT
Financial Services and Social Media
AGENDA:
2:00 – 2:05 overview and introductions
2:05 – 2:10 financial services and social media use
2:10 – 2:15 industry trends
2:15 – 2:25 USA: SEC and FINRA compliance and regulation update
UK, Canada: social media regulation and financial services
2:25 – 2:30 compliant use of LinkedIn, Facebook, Twitter and more…
2:30 – 2:35 who owns social in financial services firms?
2:35 – 2:40 what’s next for financial services and social media use
2:40 – 2:50 discussion and questions
Created and Presented by:
Thank you! Joyce Sullivan
CEO | Founder
SocMediaFin.com

30. Exclusive Presentation for:
250 Hudson St – 16th floor (PH)
New York, NY USA
Thursday, March 29, 2012
2:00-3:00 pm EDT
Financial Services and Social Media
Created and Presented by:
Joyce Sullivan
CEO | Founder
SocMediaFin.com