Category: Social Networking and Web 2.0

Twitter and Compliance

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I was struck recently by the power and misconceptions around Twitter, the current press darling of Web 2.0. On one side is the enormous power of Twitter to crowdsource the news. The fallout of the Iran elections was better covered on Twitter than the mainstream media. At one point I watched CNN only to see the anchors reading from Twitter and displaying images posted to Twitter applications.

On the other side is the misconception that Twitter communications are not regulated by the SEC or FINRA. Everyone can acknowledge that the regulations have not caught up with the current tools of web 2.0. But the existing rules were drafted broad enough to cover all electronic communication. Twitter is clearly electronic communication.

Last week at at Jeff Pulver’s 140 Characters Conference in New York an attendee said “Twitter allows us to say f— you to the SEC!”  Earlier this week there was a quote in Forbes.com that “Since brokers have to save instant messages and e-mail, but thus far have no such mandate for tweets….”

The SEC and FINRA may have more pressing issues on its hands, but the existing rules cover the use of Twitter. Sure the rules could be more explicit. But ignore them at your peril.

If you are a registered representative, you should take a look at FINRA’s Guide to the Internet.  The features of Twitter could be considered an advertisement, sales literature, or correspondence. The direct message feature is correspondence. If your Twitter feed is unprotected, each twitter post would be considered an advertisement. If your Twitter feed is protected it would be considered sales literature.

The SEC’s Guidance on the use of web sites (SEC Release 34-58288) does not give the clearest guidance. But it is clear that the rules are independent of the platform and the technology.

Insider trading, wrongful public disclosure and fraud and prohibited regardless of the communication tool. That includes Twitter.

Companies that have to monitor electronic communications should add Twitter to the mix. As the Iran election showed us, blocking access is ineffective. You should adopt a policy for Twitter or a revise your existing policies to specifically include it.  Twitter has become too popular and powerful as a tool to ignore.

Thanks to Alex Howard of Digiphile and SearchCompliance.com for pointing out both stories.

References:

Social Media and Your Compliance Program

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Bill Piwonka, Amanda Mayhew and Rodica Buzescu from EthicsPoint gave a webinar on social media and compliance. These are my notes:

The presentation started with a user poll on the approach to social media at the attendees’ organizations:

  • 27% block all social media sites
  • 42% block a few social media sites
  • only 29% allow all social media sites

In a second question, I was surprised to see that 37% of the attendees said they were using some form of Web 2.0 in their ethics program. That seemed like a big number to me.

Bill started off with a brief discussion of his view of web 2.0 and social media. He also highlighted some of the approaches and tools used by EthicsPoint. He moved on to the need of companies to monitor their brand. It easy for customers, employees and competitors to craft your brand for you (and not in the way you want). You need to know what is being said and be prepared to respond when necessary.

On the call, 11% of the attendees did not use any social media platform, 11% used one, and 40% used 2 or three. The rest (like me) used more.

Why should compliance care about Social Media? It is here to stay. Generation Y and the Millennials grew up an learned in the world of social media. They enter business organizations and are cut off from the tools they used to learn and communicate.

Rodica took over and shared her perspective. She is new to EthicsPoint. When she started, she was cut off from her networks since they blocked Facebook, instant messaging and many other social media tools.

Amanda took over and gave her perspective as the general counsel and privacy officer at EthicsPoint. She pointed out that younger workers may not have been in the business environment long enough to realize that there are limits on what you can say outside the organization and inside the organization. EthicsPoint focuses on privacy and protection of their clients information. They have a tight policy on social media to protect that information.

Bill stepped up and pointed out that you cannot ignore social media. Even if you block access, employees can easily access them from a mobile device or home. Blocking is not an effective policy. You need to let your employees know what they can and cannot do. You need a policy. Bill used Intel’s Social Media Guidelines as an example.

Bill also pointed out that even if the company does not want to engage in social media, they need to monitor what is being said about your company in social media. You also want to make sure that someone else does not use your brand on social media platforms.

Amanda came back to emphasize a few points. It is important to make it clear what is confidential and what is not public. Another point was to be respectful, realizing that your mother, friends and boss may ready what you say. Anonymity is also a hot button for her.

What can you do? How can compliance professionals use Social Media?

Create a Facebook group for your compliance team. Allow people to see who you are and develop a relationship and trust.

Use YouTube to host and distribute training videos. Why buy expensive video hosting servers and software when YouTube will do it for free.

Best Buy uses a blog to make ethics a completely transparent dialogue.  Best Buy’s Chief Ethics Officer blogs on actual ethics and incidents at Best Buy. Of course, she does not use real names and disguises identifying information.

Use web 2.0 for professional development by joining online communities focused on ethics and compliance issues. EthicsPoint has user forums focused on its product.

In the Q&A there was a lot of discussion about how much to monitor and how much to limit. “Ignorance is not bliss.”

Another issue that came up in Q&A is who to friend on Facebook and who to make connections with on LinkedIn. In particular in the educational environment it is very tricky to friend or not friend. There is a similar dynamic in the workplace.

What about productivity? Does Facebook turn you into a slacker? Does blogging make you less useful? Bill turned this around and gave example of how he uses these tools as part of his job. (It was an impressive list.)

How do you develop your own policy? EthicsPoint started with Intel’s Social Media Guidelines as their model.  (You can also take a look at one of my models: Blogging / Social Internet Policy.)

(In the interest of disclosure some of the material was borrowed from my presentation on Social Media at the Boston EthicsPoint Regional User Forum in Boston. Bill also noted this in the presentation)

Timekeeping with Lego Bricks

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The life of a law firm lawyer typically involves a great deal of time-keeping. During my thirteen years at a big law firm I saw lots of different systems. All were flawed and all had weaknesses. Certainly, none were fun.

But this Lego brick time keeping system looks like fun! As the author points out, one big flaw is someone coming into your office and reassembling your time bricks into new sculptures.

Now if you could just figure out a way to incorporate the ABA Task Codes into the system. . .

Generational Differences in the Use of Workplace Technology

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Is there a gap between generations of legal and white collar professionals in terms of technology in the workplace? LexisNexis conducted a survey to see if there really is a gap and how big it is: LexisNexis Technology Gap Survey (.pdf).

After looking at the survey results, I see that there clearly is a gap. But it is not as big as most people think. There are statistically significant differences but not the tidal wave of change. I also think that some of the differences can be attributed to the level on seniority, not the generational difference. The Baby boomers are more likely to have more senior roles than Gen X and especially Gen Y.

For example one question asked “how many times do you access a social networking site during the day?” The percentage of those who said zero was 86% for Baby boomers. But was still 38% for Gen Y. Certainly, there is a big gap. But  you should not assume that every Gen Y is on rabid user of social networking and that Baby Boomers do not know what it is.

This difference was one of the biggest in the result. Most of the other data show a much narrower gap in the use and perception of technology in the workplace.

References:

Investor Relations 2.0 After This Proxy Season

Hopefully your annual meeting of investors or shareholders went better than the annual meeting for Fortis. Shareholders in Ghent, Belgium threw shoes, coins and ballot boxes. (There is even video.)

Broc Romanek put together his thoughts on Proxy Season Developments: Ten Signs that Things are Changing Online.

  1. First Use of Live Internet Voting
  2. Soliciting Shareholder Feedback on Compensation Practices
  3. Soliciting Shareholder Feedback on Disclosures
  4. Emergence of Proponent Sites Designed to Solicit Mutual Funds
  5. Easier Ability to Track Voting ResultsUse of “RSS Street” to Follow Developments
  6. Use of Corporate Blogs (and Third-Parties) to Solicit Questions
  7. Use of Twitter to Describe Live Events
  8. Investors Communicating Through Social Sites
  9. Much Easier Use of Video Changes Everything

There is also an opportunity to review the success of the online delivery of materials through the Notice and Access Rules. Dominic Jones of the IR Web Report pointed out some statistics on its effectiveness. According to the Broadridge Notice and Access Resource Center there is a big cost savings, but also a big drop in shareholder participation.

But 2.0 tools are giving more power for investors to voice their views as part of the annual meeting. Shareholder activist Robert A.G. Monks posted a transcript of his presentation of five proposals at the Exxon meeting. You can also hear the entire meeting.

References:

JD Supra Launches Law Centers

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JD Supra is a repository of free legal information shared by legal professionals. It gives you a platform to publish work to a wide audience, maintain a profile and get credited for your experience.

Today, JD Supra launched a new feature they call Law Centers. This feature focuses JD Supra content  into subject areas for easier consumption.

For compliance professionals, you may be interested in these JD Supra Law Centers:

I am a founding contributor and (currently) a top ten contributor to JD Supra: Doug Cornelius on JD Supra.

Now Available on the Kindle

kindle-blogCompliance Building is now available on the Kindle from Amazon: Compliance Building (Kindle Edition).

I have added the Kindle subscription as a third choice on the Subscribe page.

(Amazon sets the Kindle subscription price. I would have made it available free if it were an option.)

Buy a Kindle or the bigger (and more expensive) Kindle DX.

First 100 Days

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Since we recently passed the new president’s first 100 days, I thought I would do the same for the first 100 days of Compliance Building.

Since February 12 there have been:

The website went live on February 12. (The website was private before then. All those post starting in September were just for me.)

Thanks to all of you for stopping by and seeing what is here. I hope you have enjoyed it. There is more to come, so feel free to come back. You should also feel free to subscribe. I can send the content directly to you.

If you are looking for some background on why I do this, read my Why I Blog page.

Social Media and Compliance

Here are materials from my presentation on Social Media and Compliance at the EthicsPoint Regional User Forum.

SlideDeck:Social Media and Compliance

SlideDeck with Notes: Social Media and Compliance – Hosted on JD supra

Sites Shown:

Doug’s Thoughts on Compliance Guidelines

Social Media Site Shown:

Doug on the Social Media Site Shown:

Have a Coke and . . . Alternative Billing

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Many have been contemplating and prognosticating the death of the billable hour for lawyers. I found it interesting to see a similar movement in the advertising industry. (I was unaware that the advertising industry also worked on a billable hour model.)

A story in the latest issue of The Economist points to a movement to pay advertising agencies for value, not hours: Clock-watchers no more. “On April 20th Coca-Cola said it would adopt a ‘value-based’ compensation system for the advertisers that do work for its 400 brands. Rather than paying advertising agencies for hours worked, Coke will pay for results achieved.”

The New Coke model covers an advertising agency’s costs, plus a bonus. The bonus depends on measured results, including overall performance, and the sales and market share of the products being advertised. Coke states that the goal of the program is not to cut costs, but to inspire creativity and efficiency.

I wonder if the legal department at Coca-Cola is following the lead of the advertising department?