When it comes to social media and online communication, the distinction between business and personal accounts has blurred – with troubling consequences.

The social universe is rife with examples of executives who overshare in ways that reflect badly on their companies: racist or sexist comments, for example. Some say it's not a problem as long as their accounts are personal and their postings reflect just their own thoughts.

Do the shareholders care? Yes. If you can tie an inappropriate tweet from an executive back to his company's brand, it matters. Just by using Twitter, for example, the executive has already broadened his public presence. A “my tweets are my own” disclaimer will do no good.

If you want to tweet in a thoroughly candid fashion on a personal basis, consider these precautions:

Don't display your company title (such as SVP).

Don't use the same headshot for personal and business social media profiles/accounts.

Don't include your work e-mail on the account.

Don't say where you work, so your tweets are truly personal.

Do use privacy settings, if you want your social profile strictly personal or you want to control who actually accesses your social communications. For example, you can control which of your followers on Twitter may actually view your tweets.


The first step in managing risk, of course, is to be aware of, and understand, the risks mentioned above. Then advisors need to establish standards, document them, and monitor the way they comply.

Let's look at these more closely:

1. Understand the risks – Investment advisors are specifically charged with the responsibility of knowing the risks in their business – for example, they must avoid creating an advertisement or miscommunication with the public. Investment advisors should identify risk exposure given their operations, and must implement and supervise compliance procedures reasonably designed to assure compliance with the Advisers Act advertising rules.

2. Document policies and procedures – The expectation nowadays is that a social media presence will be accompanied by policies and procedures designed to assure compliance with securities laws. For example, you may want to put rules in place to review content before posting, and train employees who are posting on the site. You may want to give special attention to any investment 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 be sensitive to those issues.

3. Test and monitor – Investment advisors should test their compliance procedures to see how well they address risks, and set up a system of regular monitoring.

4. Pay close attention to third parties – Investment advisors may be responsible for third-party content, and you may have to take some third-party content down from your site.

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