Finance Professionals Can't Use Professional Networking Site?

LinkedIn can best be described as a networking site for professionals. But what if professionals aren't allowed to use it? Tac Anderson of New Comm Biz told the story of a friend in the finance industry who was forced to delete his LinkedIn profile due to a ruling by the Financial Industry Regulatory Authority (FINRA). According to FINRA's Regulatory Notice 10-06, all business communications via LinkedIn, Facebook, Twitter, or MySpace are considered official communications with the public and subject to all FINRA requirements, and LinkedIn profile pages are considered individual registered representative Websites. Anderson points out that FINRA doesn't establish policy, but it suggests guidelines for individual companies to follow. From the FINRA ruling: Social networking sites typically contain both static and interactive content. The static content remains posted until it is changed by the firm or individual who established the account on the site. Generally, static content is accessible to all visitors to the site. Examples of static content typically available through social networking sites include profile, background, or wall information. As with other Web-based communications such as banner advertisements, a registered principal of the firm must approve all static content on a page of a social networking site established by the firm or a registered representative before it is posted. Firms may use an electronic system to document these approvals. Social networking sites also contain non-static, real-time communications, such as interactive posts on sites such as Twitter and Facebook. The portion of a social networking site that provides for these interactive communications constitutes an interactive electronic forum, and firms are not required to have a registered principal approve these communications prior to use. Of course, firms still must supervise these communications, as discussed below. Firms must adopt policies and procedures reasonably designed to ensure that their associated persons who participate in social media sites for business purposes are appropriately supervised, have the necessary training and background to engage in such activities, and do not present undue risks to investors. Firms must have a general policy prohibiting any associated person from engaging in business communications in a social media site that is not subject to the firm's supervision. Firms also must require that only those associated persons who have received appropriate training on the firm's policies and procedures regarding interactive electronic communications may engage in such communications. As firms develop their policies, they should consider prohibiting or placing restrictions on any associated person who has presented compliance risks in the past, particularly compliance risks concerning sales practices, from establishing accounts for business purposes with a social media site. In its supervision of social networking sites, each firm must monitor the extent to which associated persons are complying with the firm's policies and procedures governing the use of these sites. Firms also should consider policies that address associated persons' continued use of such sites if the firm's supervisory systems demonstrate compliance risks. Firms should take disciplinary action if the firm's policies are violated.

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Finance Professionals Can't Use Professional Networking Site?

David Cohen

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David Cohen