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Actiance bdi 7.12

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Social Media Security & Compliance July 12, 2012 Joanna Belbey Social Media and Compliance Specialist http://linkedin.com/in/belbey www.facebook.com/#!/joanna.belbey Twitter: @belbey https://about.me/belbey
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Page 1: Actiance bdi 7.12

Social Media Security & Compliance

July 12, 2012

Joanna BelbeySocial Media and Compliance Specialist http://linkedin.com/in/belbey www.facebook.com/#!/joanna.belbey Twitter: @belbey https://about.me/belbey

Page 2: Actiance bdi 7.12

Agenda

Introductions

Changing landscape

Social Media Maturity Curve

Early successes

Regulatory landscape

9 things you can do to get started

Materials

Page 3: Actiance bdi 7.12

Joanna Belbey

Social Media and Compliance Specialist

FINRA Education Department

Running training firm

I help firms use social media while complying with the regulations

Twitter: @belbey, @actiance

LinkedIn: http://www.linkedin.com/in/belbey

My biggest challenge?

Why are we presenting to you today?

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Internet Application Usage: Perception vs Reality

Perception: 62% of IT Professionals estimated social networking was used within their corporate network

Reality: 100% used social networking

Perception: 60% of IT Professionals estimated IM was used on their networkReality: 98% used IM

Actual customer traffic history (150+ organizations)

Representing all Internet activity from over 150K end users

Page 7: Actiance bdi 7.12

A majority of respondents indicate using social media for one or more business purposes.

SOCIAL MEDIA USAGE

For which of the following business purposes do you use social media today?

Base: all respondents in 2012 (1,428) and 2011 (1,597); multiple responses.

Social media usage

Respondents under 35 are more likely to use social media for business purposes than those 55 or older (68% vs. 45%)

Page 8: Actiance bdi 7.12

Social Media Maturity Curve

Pre-Consideration

• No social presence

• Restrictive social policy

• No social tools

• Need to: identify options, best practices

Early Consideration

• Some corporate presence

• Banned/ restrictive policy in place

• Pilot program for content distribution may be in place

• Next: justify distributed teams usage

Early Adopters

• Corporate presence

• Acceptable use policy

• Social media being used by distributed

teams/advisors

• Next: use social to develop, strengthen relationships, for some also as a sales channel

Early Majority

• Corporate social presence

• Social media usage by distributed teams advisors

• Acceptable use policy

• Next: use social to develop, strengthen relationships, for some also as a sales channel

• Previous concerns about FINRA and/ or impact of social media overcome by market acceptance and demonstrable results.

Page 9: Actiance bdi 7.12

Outline Real Results

Case Study: Wealth Management Firm (NJ)

LinkedIn Only

Listening is Key, watching connections who matter

Using Social as an integral element of communications mix to spot change

LinkedIn Connection retirement status change = $2.75m account acquisition

– Job Change noticed on Status Update = 401k rollover

– FA obtains 400 new prospects in Energy market

– New Commercial Account Opportunity through colleagues LinkedIn Connections

Page 10: Actiance bdi 7.12

Outline Real Results

Case Study: RW Baird

LinkedIn Already Available to 1200

Veteran Advisers, tech savvy

Authentic Content

@MaryS_rwbaird

– 51 followers

– 93 Tweets (at the time)

– $1m prospect

Page 11: Actiance bdi 7.12

20% of enterprises that employ social

Media beyond marketing will lead their industries

in revenue growth by 2015. GARTNER, MAY 2011

Page 12: Actiance bdi 7.12

Why is social important in Financial Services?

In the USA Gen Y accounts for $2.4 trillion worth of personal income

In 2025 Gen Y will account for 46% of personal income

Source: Javelin Research http://www.stltoday.com/business/local/article_719f49d8-15e6-5c5d-94b7-992ab12d9f97.html?print=1

Based on 26,749 online adults, USA, Source: Forrester Research, June 2011

Page 13: Actiance bdi 7.12

So who’s using Social Media? And Why?

Sales & Marketing Promotions Advertising Branding Financial Advisors / Producers

HR Background checks Recruiting

Scientists & Researchers Information exchange Collaboration

IT Investigation of security breaches

Page 14: Actiance bdi 7.12

e

Page 15: Actiance bdi 7.12

Risks of Using Social Media and Web 2.0

Data Leakage

Personal Information

Intellectual Property

Credit Card, SSN

Client Records

Incoming Threats

Malware, Spyware

Viruses, Trojans

Inappropriate Content

Compliance & eDiscovery

SEC, FINRA, IIROC

HIPAA, FISMA

SOX, PCI, FSA

FRCP- eDiscovery

FERC, NERC

User Behavior

Employee Productivity

Bandwidth Explosion

Every employee is the face of business

Page 16: Actiance bdi 7.12

Industry-Specific Legislation and Regulatory Bodies

FINRA FERC HIPAA FRCP

SEC NERC State of Oregon

GLBA CFTC Florida GRS

SOX NFAState of North

Carolina

Red Flag Rules

Fin Services Energy Healthcare Gov’t

Page 17: Actiance bdi 7.12

Key Legal Issues of Social Media

Privacy

Content Ownership

Intellectual Property Infringement

Unauthorized Activities

• Harassment

• Discrimination

• Unfair competition

• Defamation

• Confidential info

Regulatory Compliance

Page 18: Actiance bdi 7.12

Overview of Regulation & Compliance

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Types of financial advisors

Registered Representatives (Broker-Dealer)*

Investment Advisors (Registered Investment Advisor)*

Regulated by FINRA and the SEC Regulated by SEC or state regulators

Paid via commission Paid fee by client

Suitability- recommendations must be consistent with best interest of clients

Fiduciary responsibility – must place clients interests above own

Ethics Legality

Transactions Advice

*Dually registered firms must adhere to both SEC and FINRA rules.

Page 21: Actiance bdi 7.12

Financial Industry Regulatory Authority (FINRA) Regulatory Guidance 10-06, 11-39 Rule Description Best Practice

Recordkeeping Capture, save and make easily available, all written business correspondence

Third party vendor(s).

Suitability Recommendations must be suitable for each investor

Prohibit recommending specific products, investment strategies

Communications with the public

Content standards, third party standards, adoption and entanglement

Disable the ability to make recommendations. Block retweet, “like

Advertising Static v. interactive Pre-approval, post-review

Supervision Demonstrate adherence with content standards

Follow risk-based written supervisory procedures, training

FINRA Regulatory Notice 07-59

Ethical walls between research and investment banking

Restrict communications

Page 22: Actiance bdi 7.12

New Regulatory Notices from FINRA

Suitability (12-25) – effective 7/9/12

Investment Strategies

Communications with the Public (12-29) – effective 2/4/13

3 categories (institutional, retail, correspondence)

Exempts from pre-review:

online interactive electronic forum

not a financial or investment recommendation nor

promotes a product or service of the firm

Page 23: Actiance bdi 7.12

The Securities Exchange Commission (SEC) National Examination Alert

Guidance Description Best Practice

13 factors to consider for effective compliance program

Identify risks Consider pre-review of all content posted by IAs

Third Party Content Possibly testimonials May need to re-evaluate separate professional pages

Recordkeeping (Advisers Act) Capture, save and make easily available, all written business correspondence

Third party vendors

Page 24: Actiance bdi 7.12

Regulators and Social Media

FINRA: RR Jenny Ta used Twitter to tout stock. Ta’s “tweets” were unbalanced, overwhelmingly positive and frequently predicted increases. Fined $10K and suspended for one year.

SEC Division of Enforcement: Alleges that Anthony Fields of Lyons IL offered more than $500 billion in fictitious securities through various social media sites.

FINRA exams: lists of RR using social media, checking against social media policy

Page 25: Actiance bdi 7.12

9 steps to mitigate risks to deploy social media

1. Understand your firms landscape, get visibility.

2. Engage stakeholders in policy setting. Set the policy.

3. Consider and address the risks, in a granular fashion.

4. Protect your network from malware, phishing, attacks, data leakage

5. Issue and implement best practice guidelines.

6. Understand and manage the fallibility of human beings.

7. Record and retain (appropriate) communications.

8. Provide education for your users on acceptable and appropriate use.

9. Review and refine policies (regularly).

Page 26: Actiance bdi 7.12

About Actiance, Inc

A decade of expertise, a history of firsts

Global Operations

• 3 US offices, three continents• 210 employees

Dedicated Social Engagement Team

• Partnering: networks, platforms, service providers

• Regulators: FINRA, IIROC, FSA, SEBI…

• Best Practice enablement, education

Client Engagement

• 9 out of the top 10 US Banks, Top 5 CDN Banks

• 284 FINRA firms

• 100,000 Social Networking users under license

Page 27: Actiance bdi 7.12

[email protected]

@Actiance, @belbey

Further reading:Marketers Guide to Social Media in Financial Services

FINRA 10-06 and11-39 requirements mapped to Facebook, LinkedIn, and Twitter features

Social Media Handbook

Osterman Research: The Impact of New Communication Tools for Financial Services Firms

Actiance Collateral Library http://actiance.com/products/collateral-library.aspx

Contact Information

Page 28: Actiance bdi 7.12

Thank you

Confidential and Proprietary © 2012, Actiance, Inc. All rights reserved. Actiance and the Actiance logo are trademarks of Actiance, Inc

Joanna BelbeySocial Media and Compliance Specialisthttp://www.linkedin.com/in/belbey @belbey


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