Filed Under:Life Insurance, Life Practice Management

Compliance clash: FINRA rules and state laws at odds over social media

Broker-dealers are actively engaged in using Twitter, Facebook and YouTube. As social media has evolved to include corporate communications, a variety of compliance issues have developed. One such conflict is between the Financial Industry Regulatory Authority’s (FINRA) supervision rules and recently enacted state laws that limit an employer’s ability to gain access to an employee’s personal social media account.

Over the last three years, FINRA has issued two regulatory notices that provide guidance on the application of its rules to social media communications. FINRA requires broker-dealers to supervise social media communications and to retain records. At the same time, new laws in 11 states prohibit employers from seeking access to personal social media accounts of employees.

Several of these laws make it impossible for broker-dealers to comply with supervision rules if associated persons use their own social media accounts for business. How can firms “retain, retrieve and supervise” communications if they have no access to such communications and are forbidden from asking for access?

The conflict between protecting employees’ privacy under these new laws and the duty to supervise communications may not be easily reconciled in some states. Fortunately, a few of the laws contain exceptions for complying with government regulations.

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Nichole Morford

Nichole Morford
Managing Editor

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