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Tag Archives | Social Media

Why Social Media Archiving is a Must Have for Financial Services

Ever since social media first came into our lives with the emergence of platforms like MySpace in the early 2000s, it has shown no signs of slowing down. Today, over 30% of the world’s population utilizes some type of online community. In the U.S, that number amounts to 73%. Facebook itself has more active users than China’s entire population of 1.40 billion! While social media offers the benefits of extended reach, flexibility and freedom as a means of communication, financial services firms can find themselves at serious risk if they fail to archive social media content like other business communications. 

Why social media archiving is a must-have for financial services

Organizations across industries have jumped on the opportunity to use social media as a tool for branding, customer service, and sales –  with a projection that digital sales could account for more than 40% of new inflow revenue within the next 5 years. One industry experiencing particularly high returns on the investment in social media is the financial services industry, with year-to-year growth averaging 31%. In a recent survey, 79% of Financial Advisors said they had successfully acquired new clients through social media.

While social media offers the benefits of extended reach, flexibility and freedom as a means of communication, financial services firms can find themselves at serious risk if they fail to treat social media like other business communications, equally subject to regulatory laws by FINRA, SEC and FDA, including but not limited to:

Rule 17a-3 and Rule 17-a4

In a recent regulatory notice concerning blogs and social networking sites, FINRA stated that firms must retain records of all business-related electronic communications to remain compliant with Rule 17a-3 and Rule 17a-4 under the Securities Exchange Act of 1934 and NASD.

Rule 17a-4(b)

The SEC issued a rule that requires firms to keep records for business communications made via social media, even if only distributed internally. It also stated that broker-dealers must preserve records for a period of not less than three years, with the first two in an easily accessible place.

Rule 4511

This law requires organizations to preserve records under FINRA and SEA rules, in a format that complies with SEA rule 17-a. It also requires record preservation for 6 years

Regulatory Notice 10-6 and 1139

These laws focus on issues relating to FINRA members’ use of social media, including record-keeping, supervision and responding to third-party posts and links.

Failure to comply with these regulations can result in hefty fines, bad publicity, and ultimately loss of business. In April 2015, WealthForge, LLC was fined $20,000 for failure to use an  adequate supervisory system that captured, reviewed and retained social media communications used by its representatives.

Later in the year, Scottrade Inc was fined an astonishing $2.6 million for failing to implement a supervisory system or retain securities-related electronic records in the required format stated by the rules.

While there are a few options for collecting the required records for compliance, social media archiving is the most relevant technology solution that automatically monitors specified social media feeds and archives all activity associated with that feed. It also provides authentication, so that the record can be verified. Financial Services firms are in dire need of social media archiving technology; and as new rules continue to come into play in the future, they simply cannot afford a delay.

PageFreezer is a leader in the online archiving industry. We’ve been developing our state-of-the-art cloud-based system since 2010, helping over 500 clients including financial firms, multinationals, and government agencies meet their compliance requirements. We know the rules inside and out, and have the technology and systems for easy, simple, affordable social media compliance.

Archiving for FCA Social Media Compliance

In March 2015, the FCA (the UK Financial watchdog, The Financial Conduct Authority) issued compliance guidance for how financial firms can use social media:FG15/4: Social media and customer communications: The FCA’s supervisory approach to financial promotions in social mediaThe_City_London2It’s twenty pages long so, as with any government financial document, chock full of specific details. Obviously, if you’re in the industry, you (or probably your compliance officer) should absorb it all. Today though, we’re just going to focus on the archiving part; the requirement to keep accurate records of who said what, when.Section 1.25 cuts to the heart of the matter:
Firms should also keep adequate records of any significant communications. As well as helping to protect consumers, these records enable the firm to deal effectively with any subsequent claims or complaints. Firms should not rely on digital media channels to maintain records, as they will not have control over this: social media in particular may refresh content from time to time, with the consequent deletion of older material.
In other words, use an archiving service. While you might see that as a self-serving statement, it’s none the less true. Social media archiving services have the processes, technology and knowledge to ensure you have these records in place (without the need to develop everything in house).Financial Communications – Promotional or non-promotional?In general, when using social media financial firms will have two types of communication; promotional and non-promotional. As the non-promotional communications do not involve a financial aspect it’s a non-regulated activity and do not require archiving.However, anything that even has a hint of financial promotion probably falls under the regulations and thus needs archiving. Anything that “includes an invitation or inducement to engage in financial activity” is considered promotional. Be careful, a few words can turn an otherwise non-regulated communication into something that now falls under compliance.Personal, or in the course of business?Another factor is ‘in the course of business’. Are you communicating as a person, with your personal views? Or, are you communicating for business? Ensure there’s clarity, so that no one can mistake one for the other.Just because it’s a “new” medium doesn’t mean that the old rules don’t apply. All the previous rules for factors such as misleading statements, clarity, and fairness are still in place. You need to consider the medium and the intended audience; disclaimers, emphasis and balance all need to be taken into account.The guidelines go through many examples, showing what is compliant and what is non-compliant. By understanding these examples, and having proper internal policies and procedures in place, UK financial firms don’t have to be afraid of social media. Just make sure everything (including proper social media archiving) is in place BEFORE you start Tweeting and Posting!

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FTC Updates COPPA Educational Standards

The FTC recently updated their guidelines on COPPA (Child Online Privacy Protection Act), to further protect children’s use of the internet and social media when in school and in educational settings.As addressed in our previous blog, websites collecting the information of children under the age of 13 must comply with the FTC’s COPPA regulations. These regulations address standards of adequate user safeguards and guardian approved agreements, or face harsh fines from the FTC, and should archive themselves inline with FTC compliance standards.These new regulations are based in an educational context, for school, state and government enforcement. Under these new guidelines:
  • Educational bodies, acting as the parent’s agent, can now consent to the use and disclosure of a student’s personal information to a website or app. This is limited to an educational context and is strictly not for commercial or marketing purposes, and must be in line with FERPA.
  • When collecting a student’s information for strictly educational purposes, the school’s authorisation is presumed by contract with the operator in question, and additional consent form parents is not necessary.
  • Where an operator gets consent directly from the school, the operator’s method must be reasonably calculated by available technology, to ensure that a school has provided actual consent, and not a child pretending to be a teacher, for example.
  • In light of best practice standards and compliance, the school should provide parents with a notice of the websites and online services whose collection it has consented to on behalf of the parent.
  • Schools should approach and utilise this provision and all online technologies with discretion and caution, and fully understand the use, collection and disclosure of personal information by the operator.
  • Specific attention should be paid to the operator’s data retention policies, security and confidentiality standards, and ensure that it will not be used for commercial purposes.

The PageFreezer Solution for FTC Compliance

Website operators and companies complying with COPPA and FTC standards  should ensure that they have a comprehensive records management system, as is necessary with FTC regulations, for the proper use and retention of personal information and data – especially due to the sensitive nature of minor’s data that can be quickly accumulated and exploited.There is also an onus on schools and school districts to assess, monitor and ensure COPPA compliance when utilizing online and interactive educational tools targeted at students. FTC compliant companies must store transparent and reliable records, for the safety of their customers and their reputation in the threat of non-compliance.Ensure the integrity and safety standards of child-targeted websites when reviewing compliance standards by recording the information collected, privacy policies and more using this efficient and simple tool.The information and materials on this blog are provided for general and informative purposes only and are not intended to be construed as legal advice. Content on this blog is not intended to substitute the advice of a licensed attorney, as laws are subject to change and vary with time, from jurisdiction to jurisdiction. Content on this blog may be changed without notice and is not guaranteed to be complete, correct or up-to-date.