Whether you’re sitting inside a buy-side or a sell-side firm, someone in your shop is talking about using social media. But, you’re compliance officer is saying “Let’s let another shop experiment..we don’t need to be the SEC test case.”
Well, Wedbush Securities isn’t standing on ceremony. Just a few years shy of their 60th birthday, this “old-timer” isn’t letting legacy stand in its way, and is taking steps to leverage applications that have proven to change the course of history and has launched a social media initiative offering employees a way to engage in social medi
a conversations on platforms including Twitter, LinkedIn, and Facebook.
In an interview with Industry mag “MarketsMedia”, Wedbush VP of Marketing Natalie Taylor said, “Through proper training and resources, we felt confident in our decision to allow our team to be ‘social’ and engage in organic communication.”
“After all, our business is built on relationships,” Taylor said. “Through social media, our company has the ability to establish client connections, cultivate referrals and locate prospective opportunities.”
The firm is encouraging its staff to join the on-going dialogue and not to rely solely on “canned” statements, which will still be provided to supplement conversations with corporate information and activities.
Wedbush has hired Socialware, a provider of social media compliance software and services for the financial services industry. Socialware will allow Wedbush to properly review and archive social networking communications.
“We wanted a company that could provide the proper compliance technology, stay on pace with social network changes, and support our team with additional resources to accelerate their presence and reach while keeping us updated on regulatory developments,” said Taylor.
With so much on their plates, regulators have not had time to update existing policies on record retention and archiving. In fact, many of the applicable laws have been on the books for at least a decade.
With the potential risks that social media poses for producing unintended violations of securities laws, the industry and regulators are playing a form of hurry-up offense.
The starting point is Finra’s guidance on the use of social media, issued in 2010 and consisting of Regulatory Notices 10-06 and 11-39.
Finra issued 10-06 in Jan. 2010 to provide guidance to broker-dealers regarding the use of social media for advertising.
A task force was convened early in 2011 to revisit 10-06, resulting in the issuance of Regulatory Notice 11-39 as a corollary to 10-06.
“I believe regulators have provided a foundation for firm’s like Wedbush to begin using social media for business purposes, but as the industry further adopts this newer communication channel, and as social networking continues to develop and change, there is no clear way to predict an increase or ease in the rules down the road,” Taylor said. “This is why having a strong company social media policy, providing the proper training, and having a multitude of resources is important.”