With more and more social media platforms popping up all the time, it can be tough to keep track of social media policies and assess their effectiveness. However, if you fail to review them annually, you might get some unexpected surprises if problems arise.
SEC provides guidance on social media
In January 2012, the SEC issued a risk alert about the use of social media by investment advisors. You can find the full document here, but their key takeaways were:
Investment advisers that use or permit the use of social media by their representatives, solicitors and/or third parties should consider periodically evaluating the effectiveness of their compliance program as it relates to social media. Factors that might be considered include usage guidelines, content standards, sufficient monitoring, approval of content, training, etc. Particular attention should be paid to third party content (if permitted) and recordkeeping responsibilities.
More recently, the SEC published Guidance on the Testimonial Rule and Social Media where they answer some of the most common questions they get on the topic. The document is from 2014 and gives some good advice on how best to manage both of these for your RIA firm. The SEC also adopted amendments to Form ADV that requires information on advisors social media accounts. In an article in InvestmentNews, the Investment Advisors Association recommends: “It will be even more critical that whatever information advisors are putting in their contracts, in their Form ADV, in their marketing materials are not inconsistent with what they’re saying on social media.”
Avoid legal trouble
Do you remember Chipotle’s social media debacle in 2015? It lost a lawsuit for firing an employee that posted negative content on social media because it turned out that Chipotle’s social media policy violated federal labor laws. That’s why you should work with your legal team to keep your policies up to date: so they comply with the Federal Trade Commission and the National Labor Relations Board.
Protect company information
Social media policies can actually help safeguard sensitive data from hackers and cyber attacks, especially in a bring-your-own-device (BYOD) working environment. Employees must know the proprietary company information that must never be shared, as well as understand that confidential information — such as client information, non-public financials, and other sensitive information — are to be communicated only ‘internally.’ A good example is General Motor’s social media policy, which clearly spells out what can and can’t be disclosed to the public.
Define which kinds of social media activities are and aren’t allowed
Although posting offensive or insensitive material on a company-branded social media page is an obvious no-no, it still happens. For the people handling your company’s social media, what precautionary mechanisms are in place to avoid a public relations disaster? Are there rules for different platforms? Beyond that, however, is a lot of gray area when it comes to if and how employees will be held accountable for what they post on their personal profiles. When social media policies clearly outline how employees should behave online and the punishments that come with violating that agreement, you can deter rogue employee posts and avoid a viral fiasco.
Effective social media policies need to be fluid and responsive to the fast-paced modern business environment. Taking the time out to perform yearly social media policy reviews will save your employees a lot of confusion while helping your company steer clear of potential PR and legal nightmares. If you have further questions, don’t hesitate to send us an email or give us a call!