The INsider

Finra's Ketchum: Questions still surrounding social media

June 28, 2011 1:46 pm ET

The following is an excerpt from the prepared statement of Richard Ketchum, Finra's chairman and chief executive, at the IRI Government, Legal and Regulatory Conference earlier today in Washington D.C. The full statement can be found here.:

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Before closing, I wanted to talk about an ongoing challenge that I know you are all struggling with: social media, and how to keep pace with disclosure and investor protection issues. In 2009, FINRA organized a Social Networking Task Force composed of FINRA staff and industry representatives to discuss how firms and their registered representatives could use social media sites for legitimate business purposes in a manner that ensures investor protection. Based on input from the Task Force and others, FINRA issued Regulatory Notice 10-06 last year.

The task force continues to examine some of the more recent questions and concerns involving social media. For example, firms have had questions about the best way to supervise "business card" information that is posted on a social media site, particularly when there is the potential for employees to communicate about securities-related business through these sites. Firms have also questioned how they can most effectively supervise employees' use of personal devices, such as smart phones, BlackBerries and iPads, which are able to access firm systems. The Task Force has discussed some broader Internet issues that extend beyond social media sites, such as the use of hyperlinks from firm websites to third-party sites, and the use of third-party data on firm websites. Our goal is to provide further guidance on these issues in a Notice to be published later this year. In the meantime, we welcome your input, and look forward to working with the industry on social media issues going forward.