Social Networking and Web 2.0 – Page 6

FINRA Issues Guidance on Social Networking Sites

Securities firms and brokers have been looking for guidance on how they can use social networking sites. Actually most industries have been trying to figure out what they can and cannot do with these sites. The difference is that the FINRA limitations on communicating with the public make it very difficult to use the sites in compliance with the FINRA rules.

Yesterday, FINRA released Regulatory Notice 10-06 that “clarifies the responsibilities of firms to supervise the use of social networking sites to ensure that recommendations are suitable and their customers are not misled. The Notice also addresses the recordkeeping and other responsibilities of firms.”

The primary goal of FINRA is to protect investors. So this notice does not open the floodgates for using social network sites. They note that they are not even certain that adequate technology currently exists to meet the requirements in the notice. I’m sure vendors will take notice.

“The goal of this Notice is to ensure that—as the use of socialmedia sites increases over time—investors are protected from false or misleading claims and representations, and firms are able to effectively and appropriately supervise their associated persons’ participation in these sites.”

In developing the Regulatory Notice, FINRA worked with its Social Networking Task Force composed of compliance and other representatives of 14 firms.

The notice does not change FINRA policies or their positions. But there are some useful clarifications. If you have used a blog, FaceBook, Twitter, or LinkedIn, the clarifications are fairly obvious. For example, a blog can be an advertisement or an interactive electronic forum. It just depends on whether you allow comments or interactivity.

FINRA has scheduled a webinar to address Regulatory Notice 10-06: Compliance Considerations for Social Networking Sites

Orignally, I heard some hints that there may be some new policies announced as part of FINRA’s March 17 webinar: Implementing Compliance Practices for Social Media. But now that description has been changed to mere address implementation of Regulatory Notice 10-06.

Sources:

Regulatory Notice 10-06
Press release: FINRA Issues Guidance to Firms, Brokers on Communications with Public Through Social Networking Web Sites
FINRA Issues Guidance to Firms, Brokers on Communications with Public Through Social Networking Web Sites by Bill Winterberg for FP Pad

Social Networking Compliance

Think Before You Tweet!

What are the challenges for broker/dealers and investment advisers trying to use social networking sites?

Complinet hosted a webinar on this topic with Clifford Kirsch from Sutherland Asbill & Brennan LLP and Debbie Corej, Vice President, Compliance – Insurance Division, Prudential.

Clifford started the discussion by pointing out the need to think about who is using these communication tools and what they are using them for. There is not a single source for the legal rules on how to use social networking tools in compliance with the regulatory requirements. You have to fit these tools into the established regulatory frameworks.

Broker/Dealer

With respect to the supervisory structure, you should look at FINRA Rule 3010. You need a policy, whether you allow use of these tools or not. You should start by looking at FINRA’s Guide to the Internet.

The next focus is whether the tools are being used as advertising and sales literature. If so, then there are content requirements, filing requirements and reviews. There is new proposed FINRA Rule 09-55 that would streamline the approach to advertising. There is no specific reference to social networking. Many commenters did request some specific discussion of social networking.

Then next hurdle is record-keeping. Some site are easy to integrate with record-keeping. SEC Rule 17A-4 has extensive requirements.

Another issue is keeping track of complaints and filing complaints. That is hard to do in the free flow of information on social networking sites. What do you do if someone complains on Twitter?

Investment Advisers

As with brokers you still need a supervisory structure and examinations for risk. You should have a policy, pro or con.

With advertising and sales literature, the requirements are not as difficult as broker/dealers. There are no filing or pre-approval requirements. SEC Rule 206(4)-1 prohibits testimonials and selective discussion of past performance.

There are record-keeping requirements, so you need a system in place for preserving the records, even though they are created on a third party social networking site.

Real Life with Social Networking at Prudential

Debbie turned to some of the challenges in her organization. They have a big umbrella. Part of the challenge is controlling the technology itself.

Prudential does block some sites and is looking at ways to open access in a way they can control. There are competing interests in the company. Recruiters have a different use than marketing. Everybody has some need to use the tools to stay connected with colleagues and experts.

There are some vendors out there trying to meet the compliance requirements. But they are all new and untested. FINRA is not giving any particular blessing on a tool.

It is important that compliance understand the different features of a site and the terms and conditions for that site. Any one social social networking site is likely to have features that fall into multiple categories for compliance requirements.

For example, you should prohibit the recommendations feature of LinkedIn. You should have an internal person as a connection so that they get a notice of updates to profiles.

You need to have people submit correspondence for record-keeping internally and then review the account to make sure all of the correspondence has been submitted.

It is important to have a policy. It is also important that the policy is not freestanding but integrated with other policies, such as confidentiality. It’s possible that if you do not prohibit a tool, you may be implicitly allowing the use of that tool.

Of course you need to test compliance with the policies. If you are banning, you should search the site for employees’ names and your company name.

FINRA Task Force

FINRA has created a task force to look at social networking. (Debbie is on the task force.) FINRA is very interested in the topic and how the mechanisms can work in compliance. At the company-level it is easier to control and monitor than at the individual registered-representative level.

There is the problem of using the sites in personal level is hard to contain. What if a friend asks you a professional question?

FINRA is hosting a March 17 webinar: Compliance Considerations for Social Networking Sites.

Social Networking is Serious Business – Presentation Materials

I joined John Pepper, the CEO of Boloco and Russ Edelman the CEO of Corridor Consulting at meeting of the New England Chapter of AIIM on Friday. The topic was “Social Networking is Serious Business.”

Russ started us off with a great background on Web 2.0 and social networking tools.

Here is the slidedeck he used:

AIIM New England Social Networking Presentation

John showed how he uses web 2.0 tools as part of his business. It was an impressive display of how he listens to his customers. My favorite story was John seeing a tweet from a customer in one of the Boloco locations complaining the background music was too loud. John called up the store manager and told him to turn it down. The customer was happy in minutes. We were also happy that John handed out Boloco cards for some free burritos.

Being the lawyer and compliance guy on the panel, I focused on the regulatory, compliance and legal issues related to web 2.0 / social networking. I showed some of the downside and the ways to get yourself in trouble. In other words, I put the emphasis on the “serious” part in the presentation name.

Here is my slidedeck:

Social Networking is Serious Business – AIIM Presentation

View more presentations from Doug Cornelius.

Since my slides are mostly images instead of words, you may be wondering what I was saying. You can see my notes along with the slides: Social Networking is Serious Business. Hosted on JDsupra.

A big thanks to the New England Chapter of AIIM for inviting me.

Are You Trying to be a Trust Agent?

Yes? Then you have probably already read at least part of Trust Agents: Using the Web to Build Influence, Improve Reputation, and Earn Trust, the new book from Chris Brogan and Julien Smith.

Most likely, you are wondering what a “Trust Agent” is supposed to be.

“Trust agents have established themselves as being non-sales-oriented, non-high pressure marketers. Instead, they are digital natives using the web to be genuine and to humanize their business.”

The main premise is that cultivating “trust” will enable you and your business to succeed. They talk about creating this trust using social networks and online media. Be a trust agent and people will gravitate towards you when they need something, and then trust you with their information and leads. The book combines some theory, with the author’s success stories, other relevant examples and actionable suggestions.

Unfortunately, I found big chunks of the book to miss the mark for my involvement on the web. My original jump into the web was to see how these tools would work as knowledge management tools inside an organization. I found these web 2.0 tools were well ahead of the enterprise tools. My approach in using the web is for personal knowledge management.

These tools (including this blog) are for me to find the information I need to succeed at my job and to organize that information for reuse. I use web tools for selfish reasons. They are really good at helping me collect information. That others can leverage my work is a by-product. That these tools allow me to stay connected with colleagues is a by-product.

Some of that stems from the nature of my job and my company. We don’t use the web to advance our corporate image. As the chief compliance officer I am not trying to sell anything, ever.

But I do like staying connected with my colleagues and peers. There are many more people outside your organization who do what you do or have the information you need to succeed, than there are inside your organization.

Trust Agents is about creating social capital. I think it could just as easily be called: “Don’t be a jerk online.” They go into a lot more detail than that and come up with six characteristics of Trust Agents.

1. Make your own game.

Try new ways of doing things. Stand out from the crowd. First movers have an advantage. They quote Warren Buffet on when to enter a market: “Be fearful when others are greedy, and be greedy when others are fearful.”

2. Be one of us.

Be part of the community. Don’t be the self-promotional jerk in the community who is continually handing out business cards and asking for business. Contribute to the community. You need to give first if you want to receive. The more you give, the better.

3. Use the Archimedes Effect

Archimedes propositioned that if he had a long enough lever and a fulcrum on which to place it, he could move the world. Leverage your message.

4. Try to be Agent Zero

Cultivate your personal networks and recognize their value. Connect with good people. Connect between different groups.

5. Become a human artist.

Learn how to work well with people and help empower people. You need to learn the etiquette and start off by listening to the community before you burst in with a full head of steam.

6. Build an army.

You can’t do it alone. You need to find people who are willing to collaborate with you.

If these concept resonate with you, then it is worth your time to read the book. If you are just starting out with web 2.0 tools you should heed the lessons in the book. Even if you are a wily veteran, you will find some useful information in this book.

Trust Agents is a bit uneven at times. In places it reads more like a collection of blog posts instead of a coherent narrative. Some of their ideas are better flushed out than others. Those six characteristics don’t have equal weight.

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This is the first book I’ve read in 2010. You can look back at the books I read in 2009.

Whales and Compliance

I was surprised to be thinking about compliance while I was reading about whales. Sure, I eat, drink and sleep compliance. But there are some lessons that compliance professionals can learn from the study of whales.

This came up while I was reading Watching Giants: The Secret Lives of Whales by Elin Kelsey.

My original interest in the book was its intersection between parenthood and whales. During college I took a class at the New England Aquarium on marine mammals taught by world-renown experts. The class was fascinating on many levels. As a parent, well, I find parenting itself interesting.

Whales are incredible species, reliant on breathing air, but needing to dive the depths of the ocean for food. For example, as the book points out, a blue whale opening its mouth to take in a school of krill is the biggest biomechanical event to happen on the planet. The scale of a whale’s life is well beyond the scale of humans. If you read about the parenting life of whales, I think you will be hard-pressed to believe that we have hunted many of these species to the brink of extinction.

Getting back to the compliance side of things, whales are hard to study. Fraud, corruption and misdeeds are hard to study. Whales spend over 95% of their time outside the boundary of human observation. The deeds that compliance professionals are looking for are also, for the most part, outside of our perception.

The compliance lesson that resonated with me was that we should not assume that we can see is truly representative of what is actually happening beneath the surface. We need to understand our perspective. What we can see and what we cannot see. When you look beneath the surface, something unexpected may be happening.

If you are looking for a good book to read, try Watching Giants: The Secret Lives of Whales.

Social Networking is Serious Business

If you live in the Greater Boston area and have $45 lying around, I am speaking on social networking on January 15, 2010 hosted by the New England Chapter of AIIM.

Social Networking is Serious Business
Newton Marriott Hotel
January 15, 2010
8:30 a.m. – 11 a.m.
$40 AIIM NE members/$45 non-members

I will be joining John Pepper, the CEO of Boloco and Russs Edelman the CEO of Corridor Consulting. Being the lawyer and compliance guy on the panel, I will be focusing on the regulatory, compliance and legal issues related to web 2.0 / social networking. That means I’m talking about the downside and the ways to get yourself in trouble.

In other words, I’m putting the emphasis on the “serious” part in the presentation name.

Happy Hanukkah

Positioning yourself for Tomorrow’s Social Media Today: Practical Approaches for Legal Professionals

Join Compliance Building’s Doug Cornelius for a 60-minute Webinar at 11:00 am Eastern time on Wednesday, December 9. It’s free, sponsored by Martindale-Hubbell Connected.

The webinar will give you examples of social media web-based tools helping legal professionals become more efficient and productive. Will we soon say goodbye to email?

Panel

The webinar panel includes:

Lee Bryant: Director of Europe’s leading social business consultancy, Headshift and author of “Social Networking for the Legal Profession”, Blogger and Tweeter
Doug Cornelius (that’s me): In house counsel, Blogger and Tweeter
Nicole L. Black: Founder of lawtech, legal technology consultancy, Blogger and Tweeter
Greg Lambert: Librarian – Lawyer – Knowledge Management – Competitive Analysis – Computer Programmer, Blogger and Tweeter
Rex Gradeless: recent graduate of St Louis University of Law, Blogger and Tweeter (and secretly employed)

Summary

I will start with my hatred of the term “social media.” For me it’s all about communication, self-interest, finding information and saving that information for later use. I have no snake-oil to sell, claim no expertise as a “social media expert” and have not written a book. My part of the panel is just focused on how I personally take advantage of these tools and where I see them going.

Nicole will talk about why you should care about intermedia.

Greg show how to use web based communication tools as information resource tools and ways to filter the information.

Rex has the perspective of social media as an opportunity aggregator, looking at Twitter, Google Wave, blogging and blog participation.

Lee will end things by looking at the social business design for the legal sector and look at how some law firms are using web-based communication internally.

You will notice that we are not talking about Martindale-Hubbell Connected.

You can register for the webinar here: http://www.interaction.com/LNMH/connected/webinars/index.cfm?wid=127

Twitter

For those of you on Twitter, we are using the #MHCO hashtag for the webinar.

Materials

The materials and some of the questions and answers are available in the Martindale-Hubble Connected group on Social Media for Lawyers. (registration required. I couldn’t get permission to post the materials publicly.)

Voting is Open for the ABA’s Blawg 100

The American Bar Association is running its third annual Blawg 100 contest. They winnowed a list of nominees down to 100 and divided them into 10 categories: News, Legal Theory, IMHO, Geo, Practice Specific, Business, Careers, Tech, Justice, and Lighter Fare.

I decided to throw my support behind those blogs that I read and enjoy among those 100. You’re only supposed to vote for 10, but I was only able to narrow down the list to my top 15.

3 Geeks and a Law Blog. Texans Greg Lambert, a law librarian at King & Spalding, Lisa Salazar, Internet marketing manager at Fulbright & Jaworski, and Toby Brown, Fulbright’s head of marketing and knowledge management do a great job addressing legal technology, the business of law and knowledge management.
Above and Beyond KM. Mary Abraham takes knowledge management to the next level.
Above the Law. We all need a little gossip now and then. Above the Law provides a look at the messy underbelly of practicing law.
Adam Smith, Esq. Bruce MacEwen has an insightful look at large law firms topics of compensation, partnership models and practicing in a global marketplace
AdamsDrafting. Ken Adams is the head cheerleader for drafting contracts in standard English.
The Client Revolution. My neighbor, Jay Shepherd does a great job of thinking about how lawyers should re-think the relationships with their clients. He also runs the employment law blog Gruntled Employees.
The Conglomerate. This crew of academics provide great information and insights into business, law, and economics.
Connecticut Employment Law Blog. Dan Schwartz offers thoughtful, original posts on the latest news and trends in labor and employment law.
TheCorporateCounsel.net. Broc Romanek provides coverage of corporate governance issues and the Securities and Exchange Commission.
Law21. Jordan Furlong writes great analyses of the present and future of the practice of law.
Legal Blog Watch. Robert Ambrogi and Bruce Carton find newsworthy stories in the legal field.
Real Lawyers Have Blogs. Kevin O’Keefe has been posting for years on how lawyers should embrace social media.
Robert Ambrogi’s LawSites. Boston area lawyer Robert Ambrogi posts reviews of Web-based research and practice management tools and directs readers to publications and events that help them bone up on Web 2.0.
Simple Justice Scott Greenfield provides great thoughts on criminal justice.
Strategic Legal Technology. Ron Friedmann first introduced me to blogging. He does a great job covering issues that can help law firms with efficiency, including outsourcing, technology and knowledge management.