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FIVE KEY CCO CHALLENGES

In the wake of these new guidelines and spot checks, we recommend that you take special care to address the following five trouble spots:

1. Unsupervised Content – There are many social media platforms out there that employees can use at any given time, and the opportunities for poorly written or non-compliant content to make its way into the world are numerous. Any CCO should have the ability to supervise and review content before it is posted. Now, it would be difficult to review every single post, but it makes sense to spot check your own team's content, and by doing so, make sure they are fully up to speed on the rules. As

Monitor Online Content

FIGURE 7.1 Monitor Online Content

CCO, you should be able to review, approve, or reject a post before it is put up on a site. See Figure 7.1.

2. Poor or Nonexistent Processes – The novelty of social media often means firms haven't yet developed a game plan for dealing with all the contingencies that go along with its use. CCOs need to document their firms' review process and be able to present it to regulators. These should include policies and procedures that include guidance about:

■ Who has access to social media

■ How those employees are trained

■ How those employees are supervised For example, you may want to put rules in place to (1) review content before posting, and (2) train employees who are posting on the site. You may want to give special attention to any performance information, past specific recommendations, or success stories. There are specific requirements that must be considered before posting this type of information, and your review process should catch those issues.

3. Where's That Post? – Depending on how large your firm's presence becomes on social media, it may be difficult to track down the many blogs, tweets, and other content that are produced on a weekly or even daily basis. Proper recordkeeping has been a hallmark of the Advisers Act, and it continues in this day and age even as social media presents

Mind Your Recordkeeping

FIGURE 7.2 Mind Your Recordkeeping

some special challenges. Good records cover what web content was posted and when; it must be indexed and easily accessible if it's in electronic format. Ideally, time-stamped screenshots should be taken of any post. Records should be kept for a minimum of five years, the first two in an advisor's office. As with content review, CCOs should test recordkeeping protocols among individual advisors periodically, and take corrective and training actions as needed. See Figure 7.2.

4. Unwanted Third-Party Posts – There are risks associated with third parties posting information or testimonials on your website, company page or profile, or blog (a “like” of your social media profile, for instance, may be considered a prohibited testimonial). Use of, linkage to, “liking,” sharing, or referring to third-party sites can cause problems, as they may not be compliant, depending on the context. The SEC has said, for example, that if the public is invited to “like” an advisor's biography on a social media site, it could be considered a testimonial disallowed by law. Don't assume that disclaimers will cover you in every contingency. We address this in greater detail in the chapters that follow.

Compliance officers absolutely must possess the ability to scrub non-compliant content posted to a firm's website by someone else. If it's your site, it's your compliance issue – even if someone else posted it! Advisors should be vigilant about such bad content, and compliance officers should have the ability to remove the offending content/com- ments immediately. As CCO, you should set the rules on who can post what content to your sites – and have the ability to block such postings altogether. Keep in mind the distinction between third-party posts on your site that you may view as your own, and third-party posts on third-party sites that you may link to or allow to be visible on your site. We cover this in greater detail later. As to the former, it is right that you might screen them for inappropriate content. As to third-party sites, as we will see, if you link to them, you have to leave them be.

5. Unschooled Staff – With the broad range of platforms available in social media and the continuous evolution in what each platform offers, it's no surprise that people who work in financial practices can find it difficult to get their arms around everything. Ignorance of the social universe, of course, is no defense as far as regulators are concerned. As FINRA puts it, “A firm must conduct appropriate training and education concerning its policies, including those relating to social media” (Regulator Notice 11-39). Choose a learning regimen that's commensurate with the depth of your involvement in social media, formalize it as policy, and review it annually.

WHEN TO CALL FOR HELP

Do these social media compliance requirements make you feel queasy? Are you worried about spending all of your time managing posts, taking screen shots, and keeping other records? There's good news. Per the SEC, it is okay to bring in a third party to help out. A growing number of firms are offering financial practices one-stop compliance platforms, with dashboards that can monitor social media activity and track detailed history across multiple social media networks.

Bottom line: Social media compliance is a challenge, but it's a manageable one. Say what you do, do what you say, keep track of it all, and you'll come out fine. And don't forget – having the right tools can also help.

Remember that we live in a real-time world, and we don't want to let that compromise us by trying to rush something into the social media world before its approved by compliance.

 
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