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Brokers face stringent social media rules

Friday 19 August 2011 - by Andrew Hickley & Will Henley


Securities brokers in the US will have to catalogue all contacts with clients using social media, such as Twitter and LinkedIn, under sweeping new guidelines.

The Financial Industry Regulatory Authority issued clarified rules this week informing companies how their advisers can use social networking sites to communicate with clients.

The guidance says firms have to retain for three years records of any business communications made by employees - even if a message was sent on the employee's personal computer or phone.

The regulatory notice, an update of one previously issued in January 2010, affects any employee using online blogs or sites such as Facebook to communicate.

Brokerages will have to train and educate their employees about the firm's social media policy, which must include an explanation of the differences between business and non-business use.


This training should ensure that employees are aware that messages are "retained, retrievable and supervised", the eight-page document says.

Firms are advised to distinguish between employees' business and personal communications by using different applications for either, Finra says.

Brokers may consider all communications with clients as being business-based, instead of purely social, it adds.

While all messages must be recorded, the firm will not be under an obligation to review every communication. However, it will be required to act where a "red flag" appears to suggest an employee is not following its social media policy.

The guidelines do not ban employees from taking part in "unscripted" conversations, such as instant messaging, with clients. The employee will however have to alert their supervisor of the exchange afterwards.

So-called "static" posts will require supervisory approval, as the item could be considered as advertising, Finra adds.

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Email: andrew.hickley@gfsnews.com




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