Archiving & Compliance Vendor Smarsh Outlines Path for Corporate Social Media Governance

- FINRA Regulatory Notice 10-6 shines light on compliance risks posed by social networking in workplace -

Portland, Ore., Feb. 3, 2010 - In the wake of the Financial Industry Regulatory Authority's (FINRA) recently-issued Regulatory Notice 10-6, which provides compliance guidance on blogs and social networking websites, Smarsh®, the managed service leader in secure, innovative and reliable email archiving and compliance solutions, counsels investment advisers and broker-dealers to look to existing email and electronic messaging communications oversight when building social media governance programs.

"With Regulatory Notice 10-6, FINRA has made its point very clearly," said Stephen Marsh, Smarsh founder and CEO. "It's the message – the client communication – that ultimately matters. Despite the governance challenges that blogs and social networking websites may present, firms still must extend their compliance policies to cover this form of communication and they must employ effective procedures to enforce them. Employees are using these tools, outlawing their use altogether is unrealistic and the 'wait and see' approach to governing social media is not acceptable."

Extending Compliance Policies and Procedures

Regulatory Notice 10-6 reasserts FINRA's commitment to protecting investors by applying its electronic communication preservation and monitoring obligations to blogs and third-party social networking websites such as Twitter, Facebook and LinkedIn. The notice details some of the inherent record-keeping, suitability and supervision challenges posed by social networking and provides definition for elements unique to the medium. For instance, it differentiates between interactive and static usage and the different approaches required for review.

FINRA-registered organizations are obligated to monitor and preserve electronic client communications such as email and instant message conversations and produce these messages in a reasonable time period when requested. Firms must regularly review their representatives' electronic messages, document these inspections and note any actions that result.

"The burden of outlining, enforcing and evaluating a specific social media compliance program remains with the firms, and while the medium is different, the obligations are the same," added Marsh. "Firms should look to their existing email and electronic messaging supervision and archiving programs to serve as a foundation, but recognize that social media presents some unique scenarios around suitability and advertising that merit policy attention."

Systematic preservation and supervision with Smarsh Social Media Archiving

Smarsh offers a tailored suite of hosted electronic message archiving solutions – including email, instant messaging, Bloomberg messaging and social media – to fill the SEC and FINRA compliance gap for thousands of investment advisors and broker-dealers. Supervision administration for all messaging archives is consolidated in the secure, Web-based Smarsh Management Console.

Smarsh introduced its social media archiving platform in the second quarter of 2009. The service enables organizations to capture, preserve, index, search, and produce messages from specified accounts. Messages are indexed and searchable via multiple criteria, including date and content keywords, within the Smarsh Management Console, and can be produced on-demand.

An audit trail captures data on every visual inspection performed by system administrators. The Management Console Reporting Center allows administrators to quantify inspection data with comprehensive reporting functionality. Customizable organizational usage reports and evidence of supervision/policy enforcement can be created in seconds.

Communications are centrally stored in Smarsh's data centers and securely accessible for review in accordance with organizational retention policy. This enables archiving clients to monitor organizational usage, enforce and evaluate the effectiveness of social media usage policies and manage their brand.

About Smarsh (www.smarsh.com)

Smarsh® is the managed service leader in secure, innovative and reliable email-archiving solutions for message compliance and records retention, proactive litigation readiness and mail server data management.

Founded in 2001, the growth of Smarsh has been recognized at both the local and national level. In 2008 and 2009, the company was named to the "Inc. 500," Inc. magazine's annual analysis of the fastest-growing companies in the United States. Deloitte honored Smarsh with a spot on its Technology Fast 500 list for 2009 and the Portland Business Journal recently ranked Smarsh No. 1 in its 2009 growth rankings for the state of Oregon.

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