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Social Media Compliance and Security
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Social Media Security & Compliance
July 12, 2012
Joanna BelbeySocial Media and Compliance Specialist http://linkedin.com/in/belbey www.facebook.com/#!/joanna.belbey Twitter: @belbey https://about.me/belbey
Agenda
Introductions
Changing landscape
Social Media Maturity Curve
Early successes
Regulatory landscape
9 things you can do to get started
Materials
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?
Why are we presenting to you today?
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 networkReality: 98% used IM
Actual customer traffic history (150+ organizations)
Representing all Internet activity from over 150K end users
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?
Base: all respondents in 2012 (1,428) and 2011 (1,597); multiple responses.
Social media usage
Respondents under 35 are more likely to use social media for business purposes than those 55 or older (68% vs. 45%)
Social Media Maturity Curve
Pre-Consideration
• No social presence
• Restrictive social policy
• No social tools
• Need to: identify options, best practices
Early Consideration
• Some corporate presence
• Banned/ restrictive policy in place
• Pilot program for content distribution may be in place
• Next: justify distributed teams usage
Early Adopters
• Corporate presence
• Acceptable use policy
• Social media being used by distributed
teams/advisors
• Next: use social to develop, strengthen relationships, for some also as a sales channel
Early Majority
• Corporate social presence
• Social media usage by distributed teams advisors
• Acceptable use policy
• Next: use social to develop, strengthen relationships, for some also as a sales channel
• Previous concerns about FINRA and/ or impact of social media overcome by market acceptance and demonstrable results.
Outline Real Results
Case Study: Wealth Management Firm (NJ)
LinkedIn Only
Listening is Key, watching connections who matter
Using Social as an integral element of communications mix to spot change
LinkedIn Connection retirement status change = $2.75m account acquisition
– Job Change noticed on Status Update = 401k rollover
– FA obtains 400 new prospects in Energy market
– New Commercial Account Opportunity through colleagues LinkedIn Connections
Outline Real Results
Case Study: RW Baird
LinkedIn Already Available to 1200
Veteran Advisers, tech savvy
Authentic Content
@MaryS_rwbaird
– 51 followers
– 93 Tweets (at the time)
– $1m prospect
20% of enterprises that employ social
Media beyond marketing will lead their industries
in 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 income
In 2025 Gen Y will account for 46% of personal income
Source: Javelin Research http://www.stltoday.com/business/local/article_719f49d8-15e6-5c5d-94b7-992ab12d9f97.html?print=1
Based 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
e
Risks of Using Social Media and Web 2.0
Data Leakage
Personal Information
Intellectual Property
Credit Card, SSN
Client Records
Incoming Threats
Malware, Spyware
Viruses, Trojans
Inappropriate Content
Compliance & eDiscovery
SEC, FINRA, IIROC
HIPAA, FISMA
SOX, PCI, FSA
FRCP- eDiscovery
FERC, NERC
User Behavior
Employee Productivity
Bandwidth Explosion
Every employee is the face of business
Industry-Specific Legislation and Regulatory Bodies
FINRA FERC HIPAA FRCP
SEC NERC State of Oregon
GLBA CFTC Florida GRS
SOX NFAState of North
Carolina
Red Flag Rules
Fin Services Energy Healthcare Gov’t
Key Legal Issues of Social Media
Privacy
Content Ownership
Intellectual Property Infringement
Unauthorized Activities
• Harassment
• Discrimination
• Unfair competition
• Defamation
• Confidential info
Regulatory Compliance
Overview of Regulation & Compliance
Types of financial advisors
Registered Representatives (Broker-Dealer)*
Investment Advisors (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 consistent with best interest of clients
Fiduciary responsibility – must place clients interests above own
Ethics Legality
Transactions Advice
*Dually registered firms must adhere to both SEC and FINRA rules.
Financial Industry Regulatory Authority (FINRA) Regulatory Guidance 10-06, 11-39 Rule Description Best Practice
Recordkeeping Capture, save and make easily available, all written business correspondence
Third party vendor(s).
Suitability Recommendations must be suitable for each investor
Prohibit recommending specific products, investment strategies
Communications with the public
Content standards, third party standards, adoption and entanglement
Disable the ability to make recommendations. Block retweet, “like
Advertising Static v. interactive Pre-approval, post-review
Supervision Demonstrate adherence with content standards
Follow risk-based written supervisory procedures, training
FINRA Regulatory Notice 07-59
Ethical walls between research and investment banking
Restrict communications
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) National Examination Alert
Guidance Description Best Practice
13 factors to consider for effective compliance program
Identify risks Consider pre-review of all content posted by IAs
Third Party Content Possibly testimonials May need to re-evaluate separate professional pages
Recordkeeping (Advisers Act) Capture, save and make easily available, all written business correspondence
Third party vendors
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).
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
@Actiance, @belbey
Further 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
Contact Information
Thank you
Confidential and Proprietary © 2012, Actiance, Inc. All rights reserved. Actiance and the Actiance logo are trademarks of Actiance, Inc
Joanna BelbeySocial Media and Compliance Specialisthttp://www.linkedin.com/in/belbey @belbey