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Why compliance experts are apt to dislike Facebook

When does a click constitute an endorsement?

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Les Abromovitz: In a discussion of this issue, one attorney at NCS argued that the individual was giving the Facebook page a thumbs-up, not the advisory firm. It remains to be seen if regulators will make that distinction.

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NCS Regulatory Compliance
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Top Executive: Mark Alcaide, COO/Partner




Ric Lager

Ric Lager

May 13, 2011 — 3:38 PM

It might be an intersting study for RIA’s and advisers to track which new clients they open advisory relationships with came to them through social media. A second characteristic of new clients to study is if the ones who came to them through social media were “young” or “old” investors. Maybe we will be surprised to find that social media can attract all age groups of investors who look for advice.

Ric Lager

<a href="http://www.lagerco.com/lager-company-about-us/" rel="nofollow">Guidance for your 401k Retirement Account At Work</a>
www.lagerco.com
763-377-2006

Bill Winterberg

Bill Winterberg

May 14, 2011 — 6:10 PM

I’ll be bold and state that the SEC will not provide guidance on this topic to registered advisers in the next twelve months.

With so many new requirements imposed by Dodd-Frank, the SEC has its hands full implementing those policies and procedures. I believe the Commission does not view the gray areas such as the “Like” button on Facebook as a high priority item for guidance or enforcement.

Bill @ <a href="http://fppad.com" rel="nofollow">FPPad.com</a>

Sarah Carter

Sarah Carter

May 15, 2011 — 5:35 PM

We’ve taken the main three social networking sites, Facebook, LinkedIn and Twitter and reviewed FINRA 10-06, applying the features within the sites, to the guidance note, as to what RIA’s should be doing with features and content.

http://www.slideshare.net/Actiance/actiance-datasheetfinramatrix

Scott Peterson

Scott Peterson

May 24, 2011 — 7:28 PM

The SEC will never “decide that social media poses a threat to prospective clients and investors.” That would be shouting at the wind. They didn’t try to ban email and they won’t ban social media. They will adapt.

The SEC sweep letters that surfaced toward the end of last year focused upon the need for firms to have social media communications policy in place, including guidance on personal use of social media by employees, a training program, supervision, archiving, and in-house disciplinary actions for misuse.

Using a disclosure statement such as the one you suggest, Les, makes a lot of sense until the SEC — sometime in the future — comes out with their own FINRA-like guidance.

Scott Peterson www.signalboostfinancial.com

Les Abromovitz

Les Abromovitz

May 25, 2011 — 2:31 PM

Ric, Bill, Sarah, and Scott make excellent points. I believe the SEC will step in when an RIA gets caught orchestrating a campaign to have clients post favorable comments on the firm’s Facebook page or sends tweets that are purposefully misleading. I expect that we will see an enforcement action to send the message that even though the SEC hasn’t provided guidance regarding social media, the Commission will punish conduct that clearly violates Rule 206(4)-1.

Les Abromovitz, www.ncsonline.com

Scott Peterson

Scott Peterson

May 25, 2011 — 2:41 PM

I agree, Les. Orchestrating a campaign to have clients post favorable comments on Facebook or Twitter most probably will be considered soliciting testimonials. A no-no any way you slice it.

Scott Peterson www.signalboostfinancial.com

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