Finra forms Social Networking Task Force
29 October 2009 | 12965 views | 0
US regulatory body Finra has formed a Social Networking Task Force to explore the compliance challenges posed by new Web 2.0 communications channels, such as FaceBook, LinkedIn, and Twitter.
The initiative was revealed in a speech given by Finra chief Rick Ketchum at Sifma's annual meeting in New York.
"Social networking sites such as Facebook or LinkedIn provide new ways to connect, inform and interact with customers," he noted. "They also raise new regulatory challenges. For example, as currently designed they may not allow you to archive and maintain the communications on your own books and records."
Both the Securities and Exchange Commission and Finra currently require firms to preserve all electronic communication records for a minimum of six years for audit and compliance purposes. Initially designed to cater for e-mail and instant messaging, the rules have been extended to cover new technologies such as social networking.
Finra currently oversees more than 5000 brokerage firms and 675,000 registered representatives.
"Many registered representatives, particularly younger ones, want to use social networking sites to communicate with friends and potential customers. As currently constructed, these sites would not permit you to easily supervise these communications," said Ketchum. "For that reason, most firms prohibit their employees from using these sites for their business. Nevertheless, interest in these sites will not go unabated."
Equally, the regulators are keen to encourage more open and transparent lines of communication between financial firms and their customers as they seek to repair the industry's battered public image.
Ketchum says the new Social Networking Task Force will comprise industry participants with a brief "to explore how regulation can embrace technological advancements in ways that improve the flow of information between firms and their customers-without compromising investor protection".
The move comes the day after Nasdaq unveiled a financial networking community on its Web site offering market commentary, investment analysis and social media tools.
Last month, instant messaging outfit FaceTime released a secure Web gateway for enterprises seeking to monitor employee content posted to blogs, wikis, webmail and social networking sites such as Twitter, Facebook and YouTube.