Category: Social Networking and Web 2.0

When Someone Steals Your Content

The web is a cut and paste world. Inevitably, someone will steal your blog post content. Rarely is their much you can do about it.

Another compliance blog copied my post on Perspectives on Hedge Fund Registration and plopped it into their blog.

They were lazy and just copied the html, leaving the picture hotlinked to my site. That means I can change the image on them, leaving a message for its readers to see that the publisher is a thief. So I replaced the picture of Paul Kanjroski on my server with a new image.

Thanks to Dominic Jones of IR Web Report for showing me how to do this (its easy).

Here is the result:
Fun games with content thieves

Advertising Limitations for Investment Advisers on Social Networking Sites

While FINRA has a very strict limitation on advertisements focusing on procedures, investment advisers have a principles driven approach to limitations on advertising.

To start, an advertisement is any communication addressed to more than one person that offers (1) analysis concerning a security, (2) any information to used in making a determination to buy to sell a security, or (3) any investment advisory service with regard to securities. That means bulk emails, television ads, radio ads, websites, and social networking sites are advertisements. If you label yourself as an investment adviser in your Facebook profile, Twitter profile, or blog information, those sites are advertisements. Even if you use them solely for personal purposes, they may be considered an advertisement if you mention securities or offer your services.

Given the broad definition of advertisement, you should just assume that your activity on a social networking site is an advertisement.

Let’s focus on the things you can’t do in an advertisement and then come back to how they affect an investment adviser’s use of the internet and social networking sites. These all come from the general prohibition on fraud under Section 206 of the Investment Advisers Act.

First, you can’t have “any testimonial of any kind concerning the investment adviser or concerning any advice, analysis, report or other service rendered by such investment adviser.” That means no recommendations on LinkedIn or other social networking site. That means you would need to moderate your blog comments and delete any that seem like a testimonial or recommendation.

Second, you can’t refer to past specific recommendations of securities. However, you can separately provide a separate detailed list of all past recommendations over at least the past year, with name of the security, the date recommended, and the price at which it was recommended. You also need to include a legend that past performance is not an indication of future performance. That means you can’t advertise your past success. Effectively, you can’t cherry-pick your best performing securities recommendations. You also need to disclose all material facts necessary to avoid unwarranted inference.

Third, you can’t advertise a graph, chart, formula, or other device for use in determining which securities to buy or sell or when to do so.

Fourth, you can’t offer any report, analysis, or other service for free, unless it is actually entirely free and without any condition or obligation.

Fifth, your advertisement can’t have any untrue statement or material fact or otherwise be false or misleading.

In looking at these principles, you can’t communicate something on a web 2.0 site that you could not put in a newspaper advertisement.

There has not been any additional guidance from the SEC on the use of Web 2.0 by investment advisers.  In a speech last week, Mary Schapiro said that the SEC “hasn’t come to a resolution on the new technology.” That alone may shy investment advisers away from using web 2.0 and social networking sites.

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Ethics and Facebook

facebook

Can a lawyer hire a third person to send a “friend request” to a witness? According to an opinion from the Philadelphia Bar Association’s Professional Guidance Committee the answer is no.

Although the information on someone’s Facebook profile is discoverable, a lawyer can’t try to access the page through deception. Although imperfect, I liked this analogy in the Bar Opinion:

The inquirer has suggested that his proposed conduct is similar to the common — and ethical — practice of videotaping the public conduct of a plaintiff in a personal injury case to show that he or she is capable of performing physical acts he claims his injury prevents. The Committee disagrees. In the video situation, the videographer simply follows the subject and films him as he presents himself to the public. The videographer does not have to ask to enter a private area to make the video. If he did, then similar issues would be confronted, as for example, if the videographer took a hidden camera and gained access to the inside of a house to make a video by presenting himself as a utility worker.

This opinion should not affect a workplace from putting a sensible policy in place for dealing with Facebook and other Web 2.0 tools.  Make sure you have a Blogging / Social Internet Policy.

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Corporate Blogs and Tweets Must Keep SEC in Mind

ebayink

Richard Brewer-Hay made it into the Wall Street Journal and even got his photograph included. Who is he? He is part of the next wave of investor relations professionals who are using web 2.0 tools to provide investors with company information. In 2008, Richard started using a blog as part of eBay’s investor relations: eBay Ink Blog.

Richard then saw Twitter as a useful tool for sending out investor relations information. eBay’s lawyers even gave it their blessing. (After they found out about it and required some disclosure language.) The first big test was the March 11 shareholder meeting where he live tweeted from the audience, broadcasting the meeting beyond the four walls of the room.

The Securities and Exchange Commission laid the groundwork for this approach in the August 2008 Guidance on the Use of Company Website [Release 34-58288] (.pdf) The SEC stated that: “We acknowledge the utility these interactive web site features afford companies and shareholders alike, and want to promote their growth as important means for companies to maintain a dialogue with their various constituencies.” At today’s Society of American Business Editors and Writers convention in Denver, Mary Schapiro noted that the SEC favors greater and broader disclosure [using Twitter and other tools to communicate with investors] but that it hasn’t come to a resolution on the new technology.”

The first step is the analysis of whether and when information is “public” for purposes of the applicability of Regulation FD. In the guidance, the SEC laid out a three part test for “companies to consider whether and when: (1) a company web site is a recognized channel of distribution, (2) posting of information on a company web site disseminates the information in a manner making it available to the securities marketplace in general, and (3) there has been a reasonable waiting period for investors and the market to react to the posted information.”

The next step is to consider whether and when postings on their web sites are “reasonably designed to provide broad, non-exclusionary distribution of the information to the public.” (Rule 101(e)(2) of Regulation FD.

Lastly, the company needs to keep in mind that the antifraud provisions of the of the federal securities laws, including Exchange Act Section 10(b) and Rule 10b-5 are applicable to the content of its web site.

It was great to see eBay’s effort being lauded in the WSJ. It is strange that other companies have not joined the trend. I would guess that there is a lack of business results associated with the transition from web 1.0 to web 2.0. To make the transition, an investor relations professional would need to show that one of the following is true:

  • Increase in share price
  • Reduction in securities and shareholder litigation
  • Reduced costs
  • Increase in revenue

I think it is hard to show that they could achieve any one of these goals. Perhaps you could show that the content management of a blog is less expensive and easier to maintain than a commercial product. WordPress (which powers Compliance Building) is free and offers great content management tools.  You would also need to make the transition from using the public relations news wire services to the blog platform in order to comply with the selective disclosure rules of Regulation FD.

Personally, I think it is the better way to go. Companies can better control the message by using their own website to communicate with investors. But you nee people like Richard to prove the value proposition. We also need the SEC to take a better position on using these tools.

Are there other companies making the most of web 2.0 and joining the Investor Relations 2.0 movement?

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The Legal and Regulatory Implications of Internet Privacy

Pillsbury Winthrop Shaw Pittman LLP

Pillsbury Winthrop Shaw Pittman LLP and Protiviti presented a webinar on the legal implications of social networking. These are my notes.

Rocco Grillo of Protiviti started off the presentation. Social networks have become part of many people’s day-to-day work. They have not replaced email, but are still robust communication tools. The first presenter offered the example of a Fortune 500 Company that wanted to shut down access to several social networking sites and make the use of them during working hours as a terminable offense. They found out that their human resources group used Facebook extensively as part of their recruiting program.

He moved on to social networking risks, pointing out the ability of these sites to include trojans or viruses to computers. (Although he did not offer any examples of how they offer any more of threat than other websites.) Rocco emphasized the importance to create policy and work with your company to craft one that takes into account how people in your organization uses these tools. Use of the sites is not an IT decision. You need to work with a larger group of stakeholders.

He noted the ability of profile spoofing on these sites. How do you know that the person behind that profile is that person? Avoid publishing common verification information like your date of birth or mother’s maiden name. Rocco shared some other scare stories.

Rocco did move on to balancing the risks with the benefits of the tools. Shutting down social networks does not remove the risks. You need a balanced strategy. These are powerful tools, but you need to make people aware of some of the risks.

Ben Duranske took over next. He is part of Pillsbury’s virtual worlds and video games practice. He pointed out that besides Second Life, many of these virtual worlds are pitched towards kids. Sites like Webkins and Club Penguin target a younger audience than Second Life. The roadblocks for virtual worlds are bandwidth, processing power, and ease of access. Since they are proprietary, virtual worlds are walled gardens and there is no standardization. These sites allow users to create things. There are real dollars involved and real money. The Terms of Service of these sites largely concede ownership of your content to the site and allow them to disclose lots of the information. They are very willing to respond to subpoenas requested the revelation of user identities.

Ben laid out some key concerns regarding privacy in mainstream virtual worlds and games:

  • Violation of Export Restrictions
  • Loss of Trade Secret Protection
  • Inadvertent Privacy Policy Violations
  • Destruction of Confidentiality Protections

He pointed out that he does not communicate with client in virtual worlds regarding their cases.

Since many of these sites are targeted at kids, you need to make sure you comply with the requirements of Children’s Online Privacy Protection Act (COPPA).

Wayne Matus of Pillsbury moved on to cloud computing. Your information and the things you are doing are not happening on your computer or server, but are actually somewhere else. He pointed out four principal types of cloud computing:

  • Internet-based services
  • Infrastructure as a service
  • platform as a service
  • software as a service

Why should lawyers care? The Fourth Amendment. It is not clear if those protections apply to cloud computing. Every man’s house is his castle. But is your piece of the cloud part of your castle? Do you have a reasonable expectation of privacy for this information up in the cloud?

In United States v. Miller, 425 U.S. 435 (1976), the Supreme Court held a government’s demand on a bank did not affect any 4th Amendment interest of its customer. In United States v. Ziegler (2007), the United States Court of Appeals for the Ninth Circuit acknowledged that an employee has a right to privacy in his workplace computer. The court also found that an employer can consent to searches and seizures that would otherwise be illegal.

You need to comply with the Patriot Act. You have some uncertainties as to what jurisdiction applies. You may not know where you information actually exists. There are lots of complex laws that limit the flow information: HIPPA, Tax returns, Attorney-Client privilege, Electronic Communications Privacy Act, Fair Credit Reporting Act, etc. Part of the problem is that many of the contractual agreements with the cloud computing providers do not adequately address many of these issues.

Wayne offered up some things to include in the terms of service:

  • Use of data
  • Location of data
  • Encryption
  • No change of terms
  • Destruction
  • Ownership (assignment)
  • Subpoena
  • Audit rights

The 4 Ps of the Internet: Personal, Private, Professional, and Public

4_ps_of_social_internet

I often hear the challenge of using the social internet as struggling with the balance of social (or personal) information and professional information. This never seemed to frame the issues correctly for me. Was it really one or the other?

So I started thinking about the 4 Ps: Personal, Private, Professional, and Public.

These seemed to be the terms that most people talked about. Many people struggle with the balance of what information they make available on the internet. Some of this was information published through personal choice. Some of this was information published because it is public information.

If you are a professional, you are marketing yourself and want some of your professional career public. Conversely, there are aspects of your social life that you want to be private. But there are many personal things you would want to be public and some professional things that you would want to be private. There was a struggle with balance, but was it really one against the other.

So I sat down with the 4 Ps and tried to draw out my thoughts to see if I could change this analysis. I came up with this drawing:

4_ps_of_social_internet

There is the balance of professional versus personal and another balance of private versus public. With any item of information you need to evaluate which area it falls into. Public and professional information is in the green zone and can go right out there. Meanwhile the personal and private information is in the red zone and you want to hold on tight to it.

So what goes in the yellow zone? An example for me is my kids. I often talk about The Son and The Daughter, but rarely use their actual names. I put up a few pictures of them but in more limited location.

What about the orange zone? I am sure everyone has some black marks in their professional career that they want to keep out of the public eye. (Not me of course!) If you are a lawyer and have a disciplinary action against you, that may be public knowledge. You may not want to publicize it. (Avvo does!)

What do you think of this analysis?

Martindale- Hubbell Connected Opens Its Barn Door

Martindale-Hubbell Connected: Professional Networking Site for Lawyers

LexisNexis has opened the doors to Martindale-Hubbell Connected, their professional networking site for lawyers. The site has been in beta for many months and still has the beta label. If you are a lawyer you can now register and join the online community: http://www.martindale.com/connected. If you are not a lawyer, you are not invited yet.

I manage to sneak into the site several months ago and finally posted Martindale-Hubbell Connected – My Thoughts last weekend. Several other commenters have offered some harsh opinions about the site for locking them out or for the problems with registration process.

Connected has been a lonely place while I have been a member. Perhaps that will change now that they are opening the community to a larger audience.

The lure of Connected is the idea of combining an online networking community, the Martindale-Hubbell lawyer listings, and the enormous pool of data in the Lexis databases. Theoretically, your lawyer listing, articles, cases, news, and people connections would be all linked together in one place. None of that seems to be in place yet on the launch.

One problem is that Connected is targeting the majority of lawyers instead of a crowd of early adopters. They want to be the largest online community. That is a different strategy than Legal OnRamp, another professional networking site for lawyers. Legal OnRamp is focusing on people who will contribute to that community. There is a barrier to entry and you may get kicked out if you don’t contribute.

Are online communities so mainstream that you can get lots of lawyers onboard and can skip targeting early adopters? I am skeptical. I predict that there will be many lawyers who register (or try to register), see the lack of content, and never come back. Early adopters will  see that Connected is merely a mediocre social network platform lacking many of the robust features of Facebook, LinkedIn or Twitter.

Or maybe I am wrong. Register for Connected and try it out for yourself. Then come back here and leave a comment, letting us know what you thought.

See also:

Compliance and Recommendations on Social Networking Sites

View Doug Cornelius's profile on LinkedIn

I am an enthusiast of social networking sites and web 2.0. But I realize they have limitations and dangers. I have been very concerned about the Recommendations feature in LinkedIn. That feature allows any of your connections on LinkedIn to post a recommendation or endorsement about you that appears on your profile page.

At first, that seems great. Since the one view of LinkedIn is that it operates as an online resume, posting recommendations is a smart feature. But what if you are in a regulated industry? Many professions have limitation on what they can say in advertisements and what they can say about their services.

I took a look at how recommendations are regulated for investment advisers and for lawyers. Two areas that affect me the most.

If you a registered investment adviser, you are subject to Rule 206(4)-1:

a. It shall constitute a fraudulent, deceptive, or manipulative act, practice, or course of business within the meaning of section 206(4) of the Act for any investment adviser registered or required to be registered under section 203 of the Act, directly or indirectly, to publish, circulate, or distribute any advertisement:

(1) Which refers, directly or indirectly, to any testimonial of any kind concerning the investment adviser or concerning any advice, analysis, report or other service rendered by such investment adviser. . .

It looks like recommendations are prohibited in an “advertisement.” The definition of “advertisement” is broad:

b. For the purposes of this section the term advertisement shall include any notice, circular, letter or other written communication addressed to more than one person, or any notice or other announcement in any publication or by radio or television, which offers (1) any analysis, report, or publication concerning securities, or which is to be used in making any determination as to when to buy or sell any security, or which security to buy or sell, or (2) any graph, chart, formula, or other device to be used in making any determination as to when to buy or sell any security, or which security to buy or sell, or (3) any other investment advisory service with regard to securities.

Is your LinkedIn profile an “advertisement” under this rule?  If you state that you offer investment advisory services on your LinkedIn profile, then I think it is an advertisement. So you should not have recommendations.

What about lawyers? The first problem is that every jurisdiction has a different set of rules about attorney advertising. You need to take a look at the rules in your jurisdiction.

First look to the ABA Model Rule 7.1:

A lawyer shall not make a false or misleading communication about the lawyer or the lawyer’s services. A communication is false or misleading if it contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading.

Under this rule, you could have a recommendation as long as does not have a material misrepresentation and is not misleading. That gets you into gray areas very quickly.

This is just a model rule. Every state is different. For example, Arkansas[Rule 7.1 (d)], Florida [Rule 4-7.2(c)(1)(J)], Indiana [Rule 7.2(d)(3)], South Carolina [Rule 7.1(d)], and Wyoming [Rule 7.2(h)] all explicitly prohibit any kind of testimonial in attorney advertising. Nevada, Pennsylvania, California, Louisiana, Missouri, New York, Oregon, South Dakota, Texas, and Virginia have limitations on what can be said in a testimonial or a disclaimer that needs to be present.

What do I think? Keep recommendations off your LinkedIn profile.

See:

Martindale-Hubbell Connected – My Thoughts

mh_connected_banner

I have been a member of the Martindale-Hubbell Connected community for several months. I met John Lipsey, Vice President, Corporate Counsel Services for LexisNexis in September at a speaking engagement on Social Networking for Lawyers. John told the story of why Connected would be a great resource for lawyers.

The lure of Connected is the idea of combining an online networking community, the Martindale-Hubbell lawyer listings, and the enormous pool of data in the Lexis databases. Theoretically, your lawyer listing,  articles, cases, news, and people connections would be all linked together in one place. As with blogging, you could show your expertise through the stuff you write, the cases you work on, the transactions you work on and the news about you. Then you tie that all information to a central profile and connect with the people you know.

That’s a great story. They even put together this snazzy video to prove it:

But so far it is just a story.

The site is merely a social network site with a connection to Martindale-Hubbell  listings. So far there is no connection to the substantive Lexis content. Even the social networking tools are mediocre.

I was told that there are some major upgrades and changes coming soon as they plan to open Connected to a wider audience at the end of March.

To be fair, Connected is not a disaster like the ABA’s LegallyMinded. But, Connected does not have the interesting community of users and content like Legal OnRamp, a similar platform. Connected does not have the large population of users like LinkedIn and Facebook. Connected also lacks many of the rich features of LinkedIn and Facebook.

Part of Connected’s approach is create an authenticated community. So that the person is who they say they are. An interesting approach, but to me it seems like a lot of work for little value. (Perhaps they are scarred by the squatters holding LexisNexis in Twitter.) The authentication seems designed around the Martindale listing. So to start you need to be a lawyer to get. Apparently they are going to open Connected to the larger legal community sometime this summer (according to Kathleen Delaney in the comment to this post).

Frankly, I am not sold on having a gated community for a broad legal community. What would I publish or say in Connected that I would not otherwise say on this blog, Twitter, Facebook, or LinkedIn? I am an early adopter, so maybe the general legal population would be more likely to contribute in Connected than on one of the public platforms? I am skeptical.

I have not written about Connected because there is not much to write about. It is sparsely populated and lacks content. I am one of the few non-Lexis people doing much with it. (As a curmudgeon, I mostly complain about the lack of features and the stuff that does not work.) They do replicate Compliance Building in Connected (a brilliant decision), but they have had trouble tying the posts to my Connected profile.

Lexis slapped the “beta” label on Connected because they are still working on it. Either they have a lot of work to do, or the site is intended to be mediocre.

See:

UPDATE: I corrected the spelling to “Hubbell.”

Twitter and Presentations

Follow me on Twitter
Follow me on Twitter

At President Obama’s State of the Union address, there was a fair amount coverage by the media and by the Congressman in attendance. Several dozen Congressmen have twitter accounts and many were sending out messages during the address.

Is this Good or Bad?

What about people in the audience when you are giving your next presentation?

Is this Good or Bad?

At my recent presentation with Bruce Carton, Web 2.0 – Leveraging New Media to Maximize Your Securities & Compliance Practice, Bruce and I kept an eye on the Twitter backchannel. I had published the #SecuritiesD hashtag and publicized it on a blog post and Twitter. There were a handful of twitter users during the presentation asking questions and publishing notes about the webinar to their followers. One tweet corrected an outdated statistic I cited. David Hobbie of Caselines used Twitter to keep his notes about the webinar and to capture soundbites from me and Bruce.

I also had the experience of participating in a conference through Twitter. I did not attend LegalTech New York this year, after having attended it the last few years. Fortunately, several people I know and several people I follow on Twitter did attend. They were able to relay their thoughts about the speakers, relay soundbites and communicate with each other during the conference. I even asked a question on Twitter that got relayed to speaker, answered and relayed back to me through Twitter. The use of Twitter spread the conference beyond the four walls of the convention hall. That is very powerful.

Is Twitter a good thing during presentations? Yes!

Try integrating it during your next presentation. I will.

See also: