SEC Institutes Social Media Sweep of Investment Advisers

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As reported in Investment News on February 15, 2011, the SEC began a sweep of registered investment advisers and investment advisory firms to gather information about their use of social media such as Facebook, Twitter, LinkedIn, blogs and others. The sweep also focuses on gathering more information about policies and procedures that govern the use of social media, retention of records of employees’ use of social media, including non-business use and networking sites, and training provided to employees on the use of social media.

The SEC letter issued to advisers requests the following documents or information within an adviser’s possession or custody or subject to an adviser’s control:

  1. All documents sufficient to identify the adviser’s involvement with or usage of social media websites, including, without limitation:
    1. Facebook
    2. Twitter, including, without limitation, AdvisorTweets.com;
    3. LinkedIn;
    4. LinkedFa;
    5. YouTube;
    6. Flickr;
    7. MySpace;
    8. Digg;
    9. Reddit; RSS; and
    10. Blogs and micro-blogs.
  2. All documents concerning any communications made by or received by the adviser on any social media website, including, without limitation, snapshots of documents responsive to Item 1, above.
  3. All documents concerning adviser’s policies and procedures related to the use of social media web sites, without limitation:
    1. All policies and procedures concerning any communication posted on any social media website;
    2. All policies and procedures concerning any prospective communications to be posted on any social media website; and
    3. All policies and procedures concerning any ongoing monitoring or review process related to communications posted on any social media website.
  4. All documents concerning policies and procedures concerning a third party’s use of any social media website maintained by adviser, including, without limitation:
    1. All policies and procedures concerning any communication posted by a third party, including, without limitation, actual or prospective clients of adviser, on any social media website maintained by adviser;
    2. All policies and procedures concerning any approval processes for prospective communications to be posted by a third party, including, without limitation, actual or prospective clients of adviser, on any social media website maintained by adviser; and
    3. All policies and procedures concerning any ongoing monitoring or review processes related to communications posted by a third party, including, without limitation, actual or prospective clients of adviser, on any social media website maintained by adviser;
  5. All documents concerning policies and procedures related to the use of social media websites by adviser’s personnel for personal, non-business related matters.
  6. All documents concerning personnel training and education related to the use of social media websites, whether for personal, non-business related, or business related matters.
  7. All documents concerning any informal or formal disciplinary action of personnel related to the use of social media for personal, non-business related, or business-related reasons.
  8. All documents concerning record retention policies and procedures concerning the involvement with or usage of, whether for personal, non-business related, or business-related matters, any social media website maintained by adviser by:
    1. The adviser;
    2. Adviser’s personnel; and
    3. Any third party.

At the same time, FINRA’s Social Networking Task Force is meeting next month to discuss updating its guidance on how advisers should use social-networking sites. The previous guidance was issued in Regulatory Notice 10-06.

Please contact our firm if you need assistance responding to any letter from the SEC or FINRA, modifying your policies and procedures, assessing your compliance risks, responding to any regulatory examination, or any other regulatory or arbitration related legal advice at info@eklawpc.com.

Link: Investment Adviser Services

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