SEC Issues New Social Media Guidance for Advisors

Last week, the U.S. Securities and Exchange Commission (SEC) Division of Investment Management released guidance on how investment advisors can compliantly feature public commentary about themselves on independent, third-party websites without violating the Investment Advisers Act’s testimonial prohibition.

The 74-year-old Advisers Act did not account for Facebook, LinkedIn or Twitter. The updated guidance clarifies that if comments about an advisor’s firm appear on independent, third-party social media sites, the firm can promote them under specific circumstances. In some scenarios, SEC-registered advisors can steer prospects to those comments and testimonials—provided the advisor didn’t encourage clients to post social media or web comments; didn’t write the comments under an alias to hide the reviewer’s true identity; and publishes the entire body of comments—without filtering negative comments.

The new guidance seeks to help advisors develop compliance policies and procedures that are reasonably designed to address social media participation, specifically with respect to the publication of any comments that are considered testimonials.

How does the new guidance affect your social media archiving strategies?

Right now, it’s more important than ever to evaluate your social media strategy and solutions for archiving your firm’s social media communications with customers and prospects, so that all content and messages are available for regulatory review when needed.

For advisor’s using social media, archiving will help you retain the content you need to demonstrate the way you promote your firm does not violate the testimonial rule in the Adviser’s Act.
Also, social media archiving will enable you to review and supervise your firm’s social media communication on a regular basis, and take action when potential violations are spotted. A solution with a full audit trail will also ensure that every action taken regarding social media review and supervision is documented and stored in a read-only format, so you can demonstrate this activity to regulators during exam time.

When the regulators do review your archive, make sure your social media archiving solution gives them the ability to view the full context of social media comments. That way, the regulators will be able to see all related messages threads that can help them reconstruct a conversation, ensuring messages aren’t viewed out-of-place and interpreted the wrong way.

If you choose to include a link or content from a third-party, independent site on your social pages, also consider archiving the third-party sites. Look for an web archiving solution that lets you archive a single web page, or capture an entire website. The solution should offer you the flexibility to customize the frequency of capture, and provide an immersive review, where each page can be rendered in its original native format—giving reviewers the ability to replay every slide show, see every document, explore interactive videos, visit active links and navigate the website archive as if they went back in time and visited the live site.

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