FINRA Affirms Regulation of User-Generated and Social Content

In a Regulatory Notice released earlier today, the Financial Industry Regulatory Authority (FINRA) opined that brokerage firms and their registered representatives must retain records of all communications related to the broker-dealer’s business that are made through public blogs and social media sites, such as Facebook, LinkedIn, and Twitter.

“Every firm that intends to communicate, or permit its associated persons to communicate, through social media sites must first ensure that it can retain records of those communications as required by Rules 17a-3 and 17a-4 under the Securities Exchange Act of 1934 and NASD Rule 3110. SEC and FINRA rules require that for record retention purposes, the content of the communication is determinative and a broker-dealer must retain those electronic communications that relate to its “business as such.”

Brokerage firms will now be required to archive and make discoverable business-specific content produced by their employees. They will also have to establish and maintain procedures that ensure a supervisor has either approved an interactive electronic communication before it is posted, or that a “risk-based” method of post-communication review exists and is exercised.

“While prior principal approval is not required under Rule 2210 for interactive electronic forums, firms must supervise these interactive electronic communications under NASD Rule 3010 in a manner reasonably designed to ensure that they do not violate the content requirements of FINRA’s communications rules.

Firms may adopt supervisory procedures similar to those outlined for electronic correspondence in Regulatory Notice 07-59 (FINRA Guidance Regarding Review and Supervision of Electronic Communications). As set forth in that Notice, firms may employ risk-based principles to determine the extent to which the review of incoming, outgoing and internal electronic communications is necessary for the proper supervision of their business. “

In addition, FINRA’s guidance states that all organizations under its purview must establish and communicate social media usage guidelines for their employees, and that those individuals must also receive employer-provided training on those guidelines.

“Firms must adopt policies and procedures reasonably designed to ensure that their associated persons who participate in social media sites for business purposes are appropriately supervised, have the necessary training and background to engage in such activities, and do not present undue risks to investors. Firms must have a general policy prohibiting any associated person from engaging in business communications in a social media site that is not subject to the firm’s supervision. Firms also must require that only those associated persons who have received appropriate training on the firm’s policies and procedures regarding interactive electronic communications may engage in such communications.”

FINRA’s guidance marks the beginning of a new era for financial services companies and their use of external social media. However, the Financial Services sector is not the only one that will be subject to regulation of communications made via blogs and other types of social software. An IBM Senior Product Manager related last week at Lotusphere that IBM customers in the Healthcare and Utilities industries were also beginning to ask about the management of user-generated and social content.

If your organization is currently required to comply with regulations pertaining to the use of email and instant messaging for business communication, expect to see similar requirements placed on your management of external blog and social media site posts in the near future. At some point, it is likely that these regulations will also be applied to internal communications conducted via enterprise social software.

Jive Talkin’

As you may already know, Jive Software made a bold move yesterday.  The company simultaneously created a new category in the enterprise software market and rebranded their flagship product.  Details of the announcement may be found in the Jive press release and in the following video.

Vodpod videos no longer available.

more about "What if Work Was Social Again? on Vimeo", posted with vodpod

Jive and its Clearspace enterprise collaboration product have been recognized by several influential industry analysts as leaders and visionaries in what is commonly referred to as the Social Media software category.  Jive’s repositioning underscores their commitment to leading the emerging market for business collaboration software that employs Web 2.0 philosophy and functionality.  The repositioning also implicitly reaffirms the view that this software segment has become muddled by undifferentiated marketing messages from the ever increasing number of vendors trying to stake a claim in the space.

I have never particularly liked the “Social Media” label.  Perhaps it is a sign of my age, but “media” still carries a strong connotation of information (or entertainment) generated by someone else and pushed at me.  Surely others view media as something they can create themselves and release to the Web (or an intranet) where it can be discovered by others.  However, those people are the minority, as the technographic data gathered by Forrester Research clearly shows.  Most workers are passive consumers of information, not true collaborators in the process of creating and sharing it.

The Social Media label is also very restrictive.  It applies well to the Marketing function’s Business-to-Consumer applications of Enterprise 2.0 (E2.0) software, but doesn’t adequately describe intra-business or Business-to-Business use.  While Jive’s new category label — Social Business Software — may not be the best possible phrase, it creates a bigger tent under which all types of business collaboration can be included.  The label also aims to dispel the notion that the use of social software by employees is a time-wasting activity by putting equal emphasis on “social” and “business”.

I applaud Jive Software’s attempt to broaden the market for E2.0 software by creating a new category.  This action should be a catalyst for not only their growth, but for the entire market’s as well.  The new category ultimately may not be seen as the game changing disrupter that Jive’s Chief Market Officer, Sam Lawrence, declares it to be on his blog.  However, the potential is there for Social Business Software to be the next dominant category of enterprise software, following in the footsteps of ERP and CRM.  It will be interesting to watch the results of Jive’s attempt to differentiate itself and broaden the playing field for its flagship product.

What do you think about Jive’s new category label and its potential to disrupt the market for enterprise software?