Tagged: Compliance

“Did I Just Get a Tweet From Goldman Sachs?!?”: Increased Expansion and Scrutiny of Social Media in the Financial Services Industry

With the increased use of social media by financial services industry participants, more activity and scrutiny can be expected from financial regulators. This is not to mention the litigation from investors that could arise out of, for example, the misinterpreted or well-meaning post from an advisor that simply did not translate to “less than 140 characters.” It appears that there is a trend (amongst at least the larger financial institutions) that a united and pre-approved voice is best for now.

Social Media in the Securities Industry: Complying with Reg FD

Delivering non-public material information through Internet-based social media, especially social networking sites such as Facebook, LindedIn, and Twitter, means that this information will first reach only a fraction of the investing public — those who “follow” the company using those platforms. As illustrated by the hypothetical below, this may create a potential “Reg FD” issue for a public company. As we addressed in a previous blog, the SEC has recently issued guidance to investment advisers concerning their use of social media. We have also addressed in a previous blog that FINRA, too, has issued Regulatory Notices which make it clear that member firms are expected to have policies and procedures in place that cover the use of social media by the firm and its associated persons. While direct guidance to public companies on the use of social media to report a company’s material financial matters has yet to issue, this post offers suggestions for avoiding pitfalls in this regard.

Recent Regulatory Guidance from the SEC on the Use of Social Media

Broker-dealers and investment advisors face a variety of legal and compliance ramifications resulting from the expanding use of social media for business purposes. It is now commonplace that an entity or individual in the securities industry will employ a combination of social media platforms including Facebook, Twitter, YouTube and LinkedIn to market and network with their investors and potential investors. For example, an investment advisory firm may establish its own Facebook page where industry-related information may be posted, an investment advisor may “tweet” investment and wealth management strategies, or a registered representative may present his experience, licensures or his own opinions on trending stocks on his LinkedIn page.

Non-Party E-Discovery Obligations in New York – A Question of Proportionality

In a rare New York State appellate decision concerning e-discovery, the First Department took the opportunity to address claims by a subpoenaed nonparty of inaccessibility of electronically stored information (ESI). The case, Tener v. Cremer, 2011 N.Y. Slip op. 6543 (1st Dep’t 2011), involved an alleged defamatory post originating from one of New York University’s computers. Plaintiff served NYU with a subpoena seeking identification of persons who accessed the Internet on a certain date via a certain IP address.

The Fifth Annual Gibbons E-Discovery Conference Closes With Helpful Guidance on Drafting Records Management Policies

An effective and up-to-date set of records management policies may help companies reduce the likelihood of sanctions and other adverse consequences by ensuring records are retained and preserved in accordance with legal requirements, according to Gibbons Director Phillip Duffy; TechLaw Solutions’ Northeast Regional Director Michael Landau; and Inventus LLC Senior Consultant Bryan Melchionda.

The Fifth Annual Gibbons E-Discovery Conference Kicks Off with an Interactive and Thought-Provoking Overview of the Past Year’s Pivotal E-Discovery Case Decisions

The Fifth Annual Gibbons E-Discovery Conference kicked off with an interactive overview of the important judicial decisions from 2011 that shaped and redefined the e-discovery landscape. Before an audience of general and in-house counsel, representing companies throughout the tri-state area, the esteemed panel of speakers, including Michael R. Arkfeld, Paul E. Asfendis, and Mara E. Zazzali-Hogan, moderated by Scott J. Etish, tackled the issues faced by the courts over the past year. Through a series of hypotheticals, the panelists and attendees analyzed and discussed how to handle the tough e-discovery issues that arose and how the courts’ decisions again reshaped the e-discovery landscape as we know it. Litigation hold protocols and spoliation concerns, the use of social media in discovery with its attendant ethical concerns, and the use of social media and the Internet in the courtroom were the hot topics of the day. This interactive overview of the past year’s hot button, e-discovery issues was an instant success and clearly set the tone for the remainder of the conference.

U.S. Privacy Law Protects Non-U.S. Citizens

On October 3, 2011, the United States Court of Appeals for the Ninth Circuit determined that the Electronic Communications Privacy Act of 1986 (“ECPA”), 18 U.S.C. §§ 2510 2522, applies to foreign citizens, giving them the same privacy protections Congress afforded U.S. citizens in connection with the disclosure of electronic data by third-parties service providers.

FINRA Issues Regulatory Notice 11-39: Social Media Websites and the Use of Personal Devices for Business Communications

In August 2011, FINRA, the self-regulatory agency of the securities industry, issued Regulatory Notice 11-39, offering additional guidance concerning the use of social media and supplementing its first notice on the subject–Regulatory Notice 10-06, issued in January 2010. Notice 11-39 focuses on issues relating to FINRA members’ use of social media, including record-keeping, supervision and responding to third-party posts and links. The Notice includes 14 “Q&As,” which provide instruction on the practical application of a firm’s and “associated person’s” (i.e., FINRA members) obligations under applicable laws and regulations when it comes to social media. With respect to record-keeping requirements, social media websites raise new complications because member firms do not themselves typically sponsor or host the content on those websites. The Notice, however, clarifies that record retention requirements continue to apply to content on social media sites and that the controlling question is whether the communications on those sites relate to the firm’s “business as such.” Any business communication made via Facebook, for example, must be “retained, retrievable and supervised.”

New York Courts Adopt Preliminary Conference Counsel Readiness Rule for Electronic Discovery

Earlier this month, the NY Supreme and County courts addressed the topic of electronic discovery at the preliminary conference. The Court issued a Notice amending Section 202.12(b) of the Uniform Rules as well as Rule 1(b) of section 202.70(g) and requiring that in any case “reasonably likely to include electronic discovery” counsel must come to court “sufficiently versed in matters relating to their clients’ technological systems to discuss competently all issues relating to electronic discovery” and may bring a client representative or outside expert to assist in such discussion.