Remember the good old days, when the options for communicating with clients and the public were limited to snail mail, faxes and FedEx?  Those days are long gone, and the use of social media, both personal and business, has skyrocketed.  As an employer, it is vital that you remain up-to-date on the rules related to recordkeeping and supervision as it relates to your practice and your employees.  Further, your employees must also be made aware of the compliance requirements related to social media use, as they may not understand the various complexities and how they relate to them as individuals.


It’s what you say, not how you say it

At its most basic, the best rule of thumb is that what matters is the CONTENT, not the vehicle.  The content is especially important in our industry due to SEC and FINRA compliance requirements regarding the use of electronic communications.  If something requires pre-approval by a registered principal, filing appropriately and keeping good records, it doesn’t matter if it’s delivered in a printed piece, by email or via a posting on Facebook.  It also doesn’t matter if the communication is delivered on technology owned by your business or on devices personally owned by an employee.  If you or your employee are communicating on behalf of your business, you are responsible for following all related regulatory requirements.

One thing that is a bit different with social media is the ability to give a “thumbs up” or “like” to someone else’s content.  Essentially, you are “adopting” their information and must ensure that none of their content is false or misleading. In other words, endorsing their content has the same regulatory requirements as if you had posted the information yourself.  The same holds true for your employees – make sure they know NOT to “like” or endorse business-related content, even on their personal sites.  Additionally, if you have a strong business relationship with another party – to the point where you have your business name or logo prominently displayed on their site – YOU may be responsible for the content on their ENTIRE SITE.

It may seem a bit overwhelming, but really, the difference between more traditional communications and the internet/social media is the speed and breadth of delivery.  On paper or on the Internet, the same rules of supervision, approval and recordkeeping apply.  A couple of ways you can protect yourself and your business:

  • Make sure you have clear communications policies in place, including who may represent the company to the public, what requires prior approval of a registered principal, what requires filing, etc.
  • Regularly train your employees about these policies, and let them know you may randomly spot-check their company-related social media communications made on behalf of the company to ensure compliance. This is no different than what you might do with more traditional forms of communication between an employee and a client/prospect.
  • A great message to your employees is to SLOW DOWN: THINK BEFORE WRITING, PAUSE BEFORE SENDING.
  • And a message for you is to REVIEW, APPROVE AND RETAIN all company-related electronic communications and social media postings.

Use of LinkedIn and Twitter

We frequently hear from clients who have questions about sites their employees use personally.  One in particular is LinkedIn, because it is designed specifically as a business-networking site and your employees will want to include your business name and information in their profile.  Employers and employees alike should be aware that postings on sites, such as LinkedIn and Twitter, may be viewed by regulators as testimonials and advertisements and attributable to the broker-dealer. In 2013, FINRA began issuing “sweep letters” to investigate the use of social media in our industry.  These investigations have resulted in heavy fines and penalties for the misuse of social media.  In one case, a registered research analyst was fined $15,000 (and suspended for 10 days) because FINRA considered tweets to be a “public appearance” under Rule 2210.

It’s important that you and your employees know not to include information on LinkedIn or any other site that could constitute testimonials, advertisements, public appearances, etc. To be safe, you may want to review and approve information related to your practice prior to posting.

To make matters more complex, many states have enacted legislation that prevents employers from requiring or requesting employees to divulge usernames, passwords or in any way demand access to an employee’s personal accounts or profiles on social networking websites.  It’s best to consult with an expert on financial services social media and other forms of communications to help you navigate federal and state regulations and create policies relevant to your practice.

Final thoughts

Communications and technology will continue to evolve and transform.  While this generally makes life easier, you must be careful that the use of electronic communications and technology within your practice is supervised and compliant with any applicable regulations. If you have questions about the appropriate use of social media, need help with creating and updating social media communication policies, or just want to make sure you are handling everything properly, contact us.  We’re here to help.

Contact Dan D’Alio at or 330-856-9770.