Compliance makes social networking tougher for registered reps than RIAs
Here’s a guest post by Bill Winterberg, CFP®, an operations and efficiency guru to independent financial advisers, who blogs at FP Pad. He made me realize that RIAs have more leeway than registered reps when it comes to social networking.
Websites like Twitter, LinkedIn, and blogs present compliance issues for registered representatives subject to FINRA regulations. All reps must obtain approval from the broker/dealer compliance department before posting anything on the Internet, as postings a considered advertisements.
FINRA has published guidelines for use of the Internet by registered representatives of broker/dealers. It’s worth reading if you are affiliated with a broker/dealer.
The SEC has similar guidelines that govern advertisements, including postings to public Internet forums. However, investment advisers are generally responsible for self-supervision by Chief Compliance Officers. In my opinion, investment advisers not subject to FINRA regulations have quite a bit more flexibility when using Internet and social networking websites. See http://www.sec.gov/divisions/investment/advoverview.htm and http://www.sec.gov/info/iaicccoutreach.htm.
RIAs definitely have more flexibility over registered reps when it comes to the use of the Internet. However, common sense must always prevail when using the Internet to avoid publishing security recommendations or any testimonial, which are explicitly prohibited by the SEC and state regulatory authorities.