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Floodgates Open as Social Media Arrives in Finance World

Financial Services and Social Media

Are you ready for tweets from your stockbroker? Morgan Stanley thinks so.

The firm recently announced that it will allow its 17,000 financial advisors to access social media outlets Twitter and LinkedIn.

Morgan Stanley’s move represents a sea change in the financial services industry. The Financial Industry Regulatory Authority, FINRA regulations require social media communications to meet regulations on communications to members – an onerous process requiring pre-approval by firms’ compliance departments.

Morgan Stanley Social Media Activity

As a result of the FINRA regulations, Morgan Stanley financial brokers must limit their social media activity to a list of pre-approved statements. The requirement that brokers use canned statements seems to run counter to the unfiltered, spontaneous nature of platforms like Twitter. However, allowing any use of social media whatsoever in a highly regulated industry is an important first step – one that Morgan Stanley’s competitors are sure to follow.

The sanctioned use of social media by registered representatives will create a new universe of data that financial services companies must retain access and produce to regulators and litigants in a timely manner. Here are some basic guidelines to help you remain compliant while managing this potentially massive new category of data:

Implement a platform and process that will automatically capture and retain employees’ activity on social media outlets.

Do not depend on employees to provide access to their social media accounts in order to draw down information. If the employee/employer relationship ends, so too will access. The duty to produce information from those accounts lasts much longer – up to 10 years, in some instances.

Test your process for collecting, exporting and processing social media data with your current provider. Before you are under production constraints imposed by a regulator, collect data on timelines and identify potential pitfalls. This will allow you to set reasonable expectations when a regulatory request arrives.

Corporations may not like it, but dealing with the wild world of social media is an inevitability. Simply put, social media is how people communicate today. So it’s not a matter of if, but when, your organization will have to face it. Best to adopt sound policies and controls now, rather than waiting for that call from regulators.

Maureen O'Neill