Twitter – Page 2 – Compliance Building

Facebook, Twitter, LinkedIn and Compliance: What Are Companies Doing?

The Society of Corporate Compliance and Ethics and the Health Care Compliance Association conducted a survey among compliance and ethics professionals in late August 2009 to see what employers are doing about the use of these sites by their employees.

They got back almost 800 responses from their members using an online survey tool.

50% of respondents reported that their company does not have a policy for employee online activity outside of the workplace
Of those companies that do have a policy, 34% include it in a general policy on online usage
Of those companies that do have a policy, just 10% specifically address the use of social network sites

“While the data indicates that many organizations have had to discipline employees for improper activity online, the fears may outweigh the actual risks. A survey asking about discipline regarding improper email usage would likely yield much higher numbers.”

Facebook, Twitter, LinkedIn and Compliance: What Are Companies Doing?

Social Networking for the Legal Profession

I just finished reading Social Networking for the Legal Profession by Penny Edwards and Lee Bryant. They were nice enough to send me a copy.

Penny and Lee used a few quotes from me, referred to some of my writings and used some of my social networking activity as examples. That poor judgment aside, the book is otherwise a great report on how legal professionals can take advantage of online networking tools.

The book contains practical examples and strategies. They explore the use of the tools externally as part of your marketing and business development efforts. They also explore the use of them internally for operations, communication, and knowledge management 2.0. They present a good road map with lots of options for an organization to chose among.

They start with the basics and run through a survey of the social networking sites most useful to lawyers: LinkedIn, Avvo, blogs, Facebook, Twitter, Legal OnRamp, Martindale-Hubbell Connected, JD Supra and many others.

It is not all kumbaya. The report takes into account the risks and challenges you must overcome to make implementation a success. They spend significant time talking about the culture challenges. They also explore the security, privacy and compliance issues.

Penny and Lee point out the paradigm shift with these tools. Unlike previous generations of collaboration tools, these 2.0 tools target individual benefits rather than the benefits to the organization as a whole. They focus on what’s in it for the individual. The benefits to the larger organization are a by-product. There is less emphasis on standardization and centralization.

The focus on standardization and the collective benefits was what knowledge management got wrong. The big central databases of knowledge management were useful to the organization as a whole, but provided little benefit to the individual contributor. They did not want awards or financial compensation (not that more money wouldn’t hurt), but wanted a way to help organize their own stuff in a way that was useful to them.

Unlike past generations of software, most of the innovation is coming from the consumer space. Free tools on the web are far ahead of enterprise systems. IT departments are constantly being asked why its so easy to search on Google or publish on the web, but so much harder to do so inside the law firm. If you want to know how these tools can help you inside your organization, you need to try them outside your organization.

There is a great chapter on the benefits of networking tools used inside the organization and how to achieve great benefits.

The book is expensive. The Ark Group gave it a cover price of £245. It is a great book and worth the price. If you are interested, I was given the details of a discount offer, taking $115 off the price, making it $285 plus $10 shipping. The details are on the US publicity flyer for Social Networking for the Legal Profession (.pdf).

You can read more from Penny, Lee and others at Headshift on the Headshift blog.

I thought I would also share links to some of my material that Penny and Lee cite in the book:

Twitter and Compliance

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:

Twitter security risks, popularity spark regulatory concerns by Alexander B. Howard, Associate Editor of SearchCompliance.com
For Markets, How Tweet It is by Steven M. Sears for Forbes.com
It’s Official: Fortune 100 CEOs are Social Media Slackers by UberCEO
Enterprise 2.0: Twitter Up, Facebook, MySpace Down by W. David Gardner for InformationWeek

Social Media and Your Compliance Program

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)

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.

See:

Rule 206(4)-1 The Advertising Rule
Compliance and Recommendations on Social Networking Sites – previous post
FINRA’s Guide to the Internet – previous post
Section 206 of the Investment Advisers Act
SEC No Action Letters on Advertising for Investment Advisers
- The TCW Group, Inc., November 7, 2008
- Investment Adviser Association, December 2, 2005
- Trainer, Wortham & Co. Froley, Revy Investment Co. Starbuck, Tisdale & Assoc., December 6, 2004
- Investment Counsel Association of America, Inc., March 1, 2004
- Jennison Associates LLC, July 6, 2000

Corresponding with Cornelius – a new series of blog posts

Not all of my online conversations take place here at Compliance Building. I try to make as many comments in other places as I do here. Twitter is a sporadic stream of thoughts, comments, and replies. I also try to leave as many comments on other blogs as I do posts here. I think you should join some of those other conversations. Here are some other blog posts that caught my eye and made me leave some commentary.

Corresponding with Cornelius on Collaboration with Clients by David Hobbie at Caselines

A follow up to my earlier post on Extranets for law Firm and Client Collaboration

Why Corporate Ethics is Usually an Oxymoron by Charles Green of Trust Matters

Charlie does not like the idea of ethics being treated as separate process and an individual course. I agreed.

Live Events in the Age of Social Media by Bill Pollak of Incisive Media

Bill points out the ways Twitter and the social internet are changing the ways conferences are run and what happens after. I point out that they are also changing what happens before the conference.

How Are Lawyers using Twitter by Simon Chester on Slaw.ca

I share the ways I use Twitter.

Training: What Works? By Alexandra Wrage on the wrageblog

A great grouping of four types of workers in anti-bribery training. I note that the same paradigm can be applied to most compliance and ethics training.

Social Networks and Employer Branding by Brand for Talent

Mark and I are writing some guidelines on the use of social media for our readers. We invite you to join the conversation.Let us know how you think we can embrace these tools versus police them. I offered up my draft blogging / social internet policy.

The Three Types of Collaboration by Jordan Furlong of Law 21

Jordan sets out a paradigm of three types of collaboration: Lawyer-to-lawyer, lawyer-to-client, and client-to-client. It is one of the few times I have disagreed with Jordan.

I have to credit David Hobbie with coming up with the phrase “Corresponding with Cornelius” which led to this blog post title and this new series of blog posts. (At least new for me.)

Twitter and Presentations

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:

This great piece on the Pistachio website: How to Present While People are Twittering.
Is Twitter a good thing while you’re presenting? by Olivia Mitchell
8 things I learnt about using twitter as a participation tool by Olivia Mitchell

Investor Relations 2.0

eBay took a bold move yesterday, using Web 2.0 tools for investor relations. During its first analysts’ meeting in three years, eBay management had a live twitter stream with live coverage of the meeting and bloggers with just less than live coverage of the meeting.

The securities industry seems to be struggling with Web 2.0 tools. (In fairness, most industries are struggling to with Web 2.0 tools.) Blame uncertainty about these relatively new tools. Blame securities class action law suits. Blame the SEC for a lack of guidance. It looks like eBay was tired of excuses and decided to jump into the world of Investor Relations 2.0.

An article from Dominic Jones of the IR Web Report caught my eye: SEC Disclaimers in the Age of Twitter. Was eBay really going to use Twitter as part of its investor relations? YES.

Apparently Richard Brewer had already been live-tweeting eBay’s quarterly earnings conference calls. Management knew he been using his eBay Ink Blog to report the quarterly earnings results, but were unaware of his use of Twitter. He was called in to meet with the lawyers. But rather than shut him down, they worked out some best practices. They came up with New Social Media Guidelines for Reporting Company Information.

“Plain and simple, eBay Inc. is a public company and, as such, must comply with SEC regulations. We feel that these guidelines will make that compliance more transparent. What follows is by no means a final set of micro-blogging/live-blogging best practices for companies but it is a step – and a very significant one at that. Something that I realize I will have to refine and evolve over time.”

That seems very sensible. The SEC’s Guidance on the use of company web sites (SEC Release 34-58288) does not give the clearest guidance but certainly opens the way for public companies to use 2.0 tools as part of their investor relations.

Richard kicked off his live Twitter coverage of the meeting with the new disclaimer crafted just for Twitter:

Which included a link to the a longer legal disclaimer. Its more than 140 characters, but still very concise.

An interesting thing about Twitter is the ability to tag the updates, allowing others to follow on that same topic. Richard used #ebayinc. This allowed you to follow not just Richard’s updates, but all of the reactions to Richard’s updates.

Richard also compiled the twitter updates into a traditional blog post: eBay Inc. Portfolio Roadmap Preview by John Donahue. (Did I just call a blog post traditional?)

With all of that live information and feedback, eBay’s regular investor relations page looks very cold and lifeless. It does not seem to have as much information. Perhaps it is even less relevant?

In the end, Web 2.0 tools are just communication tools. They are not that different than traditional read-only web pages or email. They do allow for easier, faster and more robust communications. You can see the difference in the comparison between the traditional eBay Investor Relations website and the eBay Ink 2.0 website.

How is your company using web 2.0 tools for investor relations?

See:

New Social Media Guidelines for Reporting Company Information from eBay Ink
SEC Release 34-58288
SEC Disclaimers in the Age of Twitter from Dominic Jones of IR Web Report
Investor Relations webpage for eBay
Analyst Days in the age of Twitter from Dominic Jones of IR Web Report
eBay Analyst Day 3/11/09 photos on Flickr
Disclaimers for eBay Ink Blog and Twitter Feed
eBay Ink Blog on Twitter
#eBayInc Tags on Twitter
eBay Inc. Portfolio Roadmap Preview by John Donahue by eBay Ink Blog

Online Social Networking: Is It a Productivity Bust or Boon?

I recently had an article on Faceblocking published in the March 2009 issue of Law Practice magazine: Online Social Networking: Is It a Productivity Bust or Boon for Law Firms?

Steve Matthews and I conducted an informal poll to see if we could confirm that law firms were blocking access to social networking sites. Our theory was proven in the results. (You can download the raw survey data (.xls) if you want to see the underlying data.)

Of those responding to the survey, 45% said their firms blocked access to social networking sites. The three most blocked sites: Facebook, MySpace and YouTube. Those are also 3 of the top 10 most visited sites on the web. We also published some of written comments from the survey respondents: Speaking Out on Social Networking.

The survey is very unscientific. Steve and I thought that it would be useful to get some data about what law firms are doing about access to social networking sites. I was surprised that 45% of firms blocked access to some social networking sites. Perhaps those working at firms subject to blocking were more likely to respond to the survey. I was also surprised that the 45% blocking percentage was fairly consistent across firm size. So small law firms were just as likely to block access as big firms.

I conducted two surveys of the summer associates at my old law firm, the vast majority went to Facebook at least once a day. It seems to me that if you are recruiting young workers, you should not cut off one of the ways they communicate. Deacons published a survey indicating that an employer’s policy regarding on-line social networking would influence a significant percentage of workers’ decision to join one employer over another.

Although I am an advocate of open access, I do so with the caveat that you need to let the people in your organization know what is proper use and to monitor their compliance. I fear that many firms use blockage as their policy. That may have worked 10 years ago, but not today. You can just as easily access these sites from iPhone or blackberry as you can from a firm computer. Blocking does not stop the bad behavior that it is trying to prevent. Blocking merely changes the access method.

There is a fair amount of research, the most prominent of which are two reports from McKinsey, showing that access to social networks at work, coupled with a good policy results in a more engaged, more motivated and potentially more innovative workplace. You should set sensible policies and set reasonable expectations for your employees. Social networking sites at their core are communications platform. You should be able to adapt your policies on email, confidentiality, marketing and similar policies to easily include social networking sites. If not, those other policies probably need updating anyhow.

See: