Such content can sometimes mislead investors, something regulators want to avoid. As a result, advisors may be obliged in some cases to let their overseers know what's being said on their sites.

FINRA has taken the view that comments made by advisors in electronic chat rooms and similar forums are considered public appearances, and are governed by the same rules. There are no filing requirements for such conversations, although content standards are the same. (Of course, the advisor's firm is entitled to have stricter standards and may limit such activity on the Web or prohibit it entirely.)

The SEC is more hands on. Federal rules bar investment companies from circulating sales literature aimed at investors in a broad range of forms unless the material is first filed with the agency. Ads that cover company performance are also required to be filed with the SEC unless they have already been filed with FINRA.

The requirements on filing have led many advisors in the SEC universe to feel a degree of insecurity about what they have to report to the agency concerning their conversations on social media. In March 2013, the SEC sought to assuage such fears by releasing detailed guidance concerning what must be filed and what need not be.


In doing so, the SEC left some doors open for itself. Regulators say the need to file depends on the content, context, and presentation of the online communications, with an eye on the substantive information being provided to social media users. That being said, they specifically cited five cases in which advisors would not have to file with the agency:

1. An incidental mention of a specific investment company or family of funds not related to a discussion of the investment merits of the fund – Examples include comments like, “Fund X Family of Funds invites you to their annual benefit for XYZ Charity.” Or, “More than 100 Fund X employees volunteered for our Annual Day of Caring!”

2. The incidental use of the word performance in connection with a discussion of an investment company or family of funds, without specific mention of some or all of the elements of a fund's return (e.g., 1-, 5-, and 10-year performance). Examples in this case include, “We update the performance of our funds every month and publish the results on Check entity here [firm's website URL].”

3. A factual introductory statement forwarding or including a hyperlink to a fund prospectus or to information that is filed pursuant to Section 24(b) or Rule 497. Examples they offered include: “We launched two new emerging market funds this week. More info about them is available here [website URL],” and, “John Doe is the new portfolio manager for ABC fund, [website URL] ”

4. An introductory statement not related to a discussion of the investment merits of a fund that forwards or includes a hyperlink to general financial and investment information such as discussions of basic investment concepts or commentaries on economic, political, or market conditions. Examples include: “The 'low volatility anomaly' is explained in our latest white paper: [website URL],” and “The election is over, what is next for our economy? See our report analyzing the elections, [website URL]”

5. A response to an inquiry by a social media user that provides discrete factual information that is not related to a discussion of the investment merits of the fund. The response may direct the social media user to the fund prospectus or to access information filed with FINRA, or to contact the issuer through a different medium such as telephone or e-mail. Such examples include:

■ Inquiry: “Why are your funds such a large investor in ABC Manufacturer's stock?”

Fund's posted response: “We respect your thoughts. As you know, ABC Manufacturer is found in many broad-market indices that our index funds are obligated to track, so some of our index funds hold those shares as a result.”

■ Inquiry: “What is a better investment, buying real estate or buying a REIT?”

Fund's posted response: “There are a lot of things to consider when choosing between the two options. The answer depends on your goals and risk tolerance and whether you want to invest in a REIT, a fund that invests in REITs, or real property. While we can't talk about specific funds on [social media] please give us a call at I 800 and we'll be happy to talk to you in more detail about this.”


The SEC also added some specific examples of social media communication that it expects advisors to file with the agency:

■ A discussion of fund performance that provides specific mention of some or all of the elements of a fund's return (e.g., 1-, 5-, and 10-year performance) or promotes a fund's returns. Examples include, “Our quarter-end returns have exceeded our expectations!” And, “Please keep in mind the fund's high double-digit returns were primarily achieved during favorable market conditions.”

■ A communication initiated by the issuer that discusses the investment merits of the fund. Examples include “Looking for dividends? Think global and consider our new Global Equity Fund, [website URL]” and “What's your favorite technology to invest in? Read our portfolio manager's views regarding Fund X as an investment opportunity in this space. [website URL]”

Work collaboratively with your compliance experts as you cast your various messages for social media. Getting it right is important, but don't let uncertainties about what is compliant keep you from becoming more involved on social Web networks.

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