{"id":1058,"date":"2010-03-04T07:00:34","date_gmt":"2010-03-04T15:00:34","guid":{"rendered":"http:\/\/www.formtek.com\/blog\/?p=1058"},"modified":"2010-03-04T07:00:34","modified_gmt":"2010-03-04T15:00:34","slug":"social-media-dilemma-for-the-world-of-finance","status":"publish","type":"post","link":"https:\/\/formtek.com\/blog\/social-media-dilemma-for-the-world-of-finance\/","title":{"rendered":"Social Media: Dilemma for the World of Finance"},"content":{"rendered":"

Businesses have been trying to come to grips with how to deal with Social Media\/Networking and the workplace.\u00a0 Financial institutions, even more so than other types of business because of their greater regulatory oversight, have been unsure of what to do.\u00a0 Some companies have issued outright bans to their employees on the use of Social Media.<\/p>\n

Now new guidelines <\/a>are out for the finance industry for the professional use of social media from the Financial Industry Regulatory Authority (FINRA), a self-regulatory organization for the financial services community.<\/p>\n

The new guidelines encourage financial companies to oversee their employee’s use of social media sites.<\/p>\n

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.<\/p>\n

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.<\/p><\/blockquote>\n

Here’s the dilemma.\u00a0 Financial companies know that they could lose customers if they fail to keep up with social media interactions.\u00a0 But putting the burden on financial institutions to monitor the online activities and postings of all of their employees is a big one.<\/p>\n

The biggest concern is around possible liability related to the release of false or misleading investment information, but there are also concerns around making sure that proprietary information is secure, that inappropriate language and behavior is not used, that employee dissent is not waved, and that employees are not wasting their time online.<\/p>\n

Part of the unease that financial companies have is around the complicated rules of when communication constitutes a financial ‘recommendation’ and under what circumstances recommendations can be made.<\/p>\n

Because of the complexities and the burden of monitoring activity, many large broker investment houses have completely banned <\/a>the use of social networking, like Bank of America’s Merrill Lynch and Morgan Stanley Smith Barney. USB AG employees can use social networking but are not allowed to comment on any business activities.\u00a0 Wells Fargo only allows employees to post biographical information and can’t participate in blogs, Twitter or Facebook.<\/p>\n

But many financial institutions are finding the new social media tools as great ways to reach out and educate.\u00a0 For example, TIAA-CREF<\/a> offers an online forum discussion retirement issues, and they host a Nest Egg Challenge game about saving money on their Facebook site.<\/p>\n

Putnam investments<\/a> hosts three different blog pages that contain financial charts and commentary.\u00a0 On the Putnam Scribd website members can post essays and documents.<\/p>\n

TIAA-CREF commented that “our goal is financial literacy.\u00a0 Our commitment is very much around speaking to customers in their comfort zone.<\/p>\n

Some vendors have recognized this as an opportunity and are jumping at the chance to capture the social networking data and make it part of the standard compliance and record keeping procedures for these regulated companies.\u00a0 This type of information is kept for six years, during which time everything is extractable and reportable.<\/p>\n

<\/p>\n

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Businesses have been trying to come to grips with how to deal with Social Media\/Networking and the workplace.\u00a0 Financial institutions, even more so than other types of business because of their greater regulatory oversight, have been unsure of what to…<\/span><\/p>\n

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