Fulbright's Litigation Trends

Posted on October 28, 2011 by Rob Radcliff

Fulbright & Jaworski’s 2011 Litigation Trend survey provides a number of interesting tidbits on all things litigation, including some insight into social media practices by employers. There were a couple of items raised in the survey that have serious implications for employers: 

•        One-fifth of all respondents reported in a previous year their companies had to preserve or collect data from an employee’s personal social media account;

 

•        19% of all respondents produced, as part of discovery, electronic information stored in a social media site in the past 12 months;

 

•        90% of U.S. respondents reported that they allowed their employees to conduct business on mobile devices; and

 

•        Only 30% of respondents had to preserve or collect data for them from mobile devices for litigation or investigation.

 

Archiving social media communications by employees is a big deal. In the context of broker dealers, FINRA requires that some social media communications be archived. Obviously, with FINRA, there is a large regulatory body governing broker dealers. But in the context of other businesses there is usually not that type of regulatory oversight. That said, should employers be protecting themselves by archiving this type of information? That will depend on the industry and costs involved.

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Financial Advisors Venture Into Social Media - Sort Of

Posted on June 17, 2011 by Rob Radcliff

                                                     

Last year FINRA published its social media guidelines as contained in Regulatory Notice 10-06.  As discussed previously, broker/dealers are subject to very onerous restrictions when it comes to social media communications.  The restrictions are so burdensome it is questionable why a financial advisor would use social media for business purposes beyond general networking.

Morgan Stanley's social media gameplan was profiled in a recent CNBC story.  Brokers will be permitted to use pre-approved messages on Twitter and LinkedIn.  Though some commentators are critical of this type of static and pre-approved communications, large wirehouses simply can't allow representatives to engage in ad hoc product endorsement or discussions.  Such an approach will likely run afoul of FINRA regulations and subject the company to unnecessary exposure.

So, Morgan Stanley will enter the social media fray slowly and others are sure to follow.  The bottom line is financial advisors cannot ignore the popularity of social media sites and opportunities to communicate with prospective and ongoing clients.  Easier said then done in this highly regulated industry.

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Texas Employment Issues/FINRA and Social Media

Posted on July 23, 2010 by Rob Radcliff

 

                                

 

Here is a link to a presentation on the Top Ten Issues for Texas Employer and FINRA Social Media compliance. I hope you find it helpful.

 

 

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Upcoming Presentations

Posted on June 4, 2010 by Rob Radcliff

 

                                

For those that are interested, I will be speaking on June 27, 2010 to the FPA Dallas/Ft. Worth Tarrant County Chapter regarding  the New FINRA Regulations on Social Media. 

On July 9, 2010, I will be speaking on Temporary Restraining Orders in Judge James Stanton's Court, the 134th Judicial District, Dallas County, Texas. 

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Facebook and FINRA: FINRA's Social Media Guidance

Posted on February 1, 2010 by Rob Radcliff

FINRA recently provided social media guidance to broker/dealers.  The Regulatory Notice  guides firms on applying communication rules to social media sites which FINRA defines to include blogs and social networking sites like Facebook.  It does not apply to sites used for purely personal reasons but the line between the two blurs as the growth of social media continues.

What are the highlights?  Here are a few:

  • If a firm or its personnel are using social media to communicate about business it is required to keep records of all such communications.
  • Don't recommend a security on a social media site or it will trigger the requirements of NASD Rule 2310 regarding suitability.  
  • If a firm is going to recommend a security such recommendation must be approved approved by a registered principal of the firm.
  • Webinars and other interactive electronic forums like a chat room are considered a public appearance under NASD Rule 2210.
  • Static information on social media, such as a profile, background, or wall information must be approved by a registered representative before it is posted.
  • FINRA considers a static blog an advertisement that requires approval of a principal but a blog that permits real-time interactive communications does not require prior principal approval.
  • Interactive communications on a social media site that are real time do not require a registered principal’s approval.  
  • Even though a principal's prior approval may not be necessary, the firm must supervise these electronic communications in a manner reasonably designed to ensure they do not violate the content requirements of FINRA's communication rules.

The notice goes on to provide more detail on supervision of social media sites and third-party posts.  Needless to say it's unlikely that a broker/dealer will recommend a security over Twitter or Facebook - that's just not smart at a number of levels.  Any real time communications regarding securities will require supervision by the firm and archiving of those communications.    I'm not sure the notice will "chill" social media use by broker/dealers but I'm also not sure it will drive them to use it as a business device other than general networking.

 

 

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