Why Financial Services Need Social Media Archiving
By
Michael Riedyk

Organizations across industries have jumped on the opportunity to use social media as a tool for branding, customer service and sales. For sales, the projection is that digital sales could account for more than 40% of new inflow revenue within the next 5 years. One industry experiencing particularly high returns on their investment in social media is the financial services industry, with an average year-to-year growth of 31%. In a recent survey, 79% of financial advisers said they had successfully acquired new clients through using social media.

While social media offers the benefits of extended reach, flexibility and freedom as a means of communication, financial services firms can find themselves at serious risk if they fail to treat social media like any other type of business communications. Sometimes it is forgotten that social media communications are equally subject to regulatory laws by FINRA, SEC and FDA. Below is an overview of key regulations that are important to keep in mind.

Rule 17a-3 and Rule 17-a4

In a recent regulatory notice concerning blogs and social networking sites, FINRA stated that firms must retain records of all business related electronic communications. They have to do this in order to remain compliant with Rule 17a-3 and Rule 17a-4 under the Securities Exchange Act of 1934 and NASD.

Rule 17a-4(b)

This is a rule issued by the SEC that requires firms to keep records for all business communications that were made through social media, even if the communications were only distributed internally. It also stated that broker dealers must preserve these records for a period of no less than three years. For the first two years of this period, the records need to be located in an easily accessible place.

Rule 4511

This law requires organizations to preserve business communication records under FINRA and SEA rules, in a format that complies with SEA rule 17-a. It also requires record preservation for six years.

Regulatory Notice 10-6 and 1139

These laws focus on issues relating to FINRA members’ use of social media. This includes record keeping, supervision and responding to third party posts and links.

Failure to comply with the regulations listed above can result in hefty fines, bad publicity and ultimately loss of business. In April 2015, Scottrade Inc. was fined an astonishing $2.6 million for failing to implement a supervisory system or retain securities related electronic records in the required format as stated by the rules.

While there are a few options available for collecting the required records for compliance to the rules, social media archiving is the most relevant technology solution. This method involves automatically monitoring specified social media feeds and archiving all activity associated with that feed. It also provides authentication for social media posts, so that the records can be verified. Financial services firms are in dire need of social media archiving technology. Since new rules continue to come into play in the future, they simply cannot afford a delay.

Archiving Best Practices for Financial Services

To ensure consistent and effective archiving of social media elements, financial services should:

Michael Riedyk is the co-founder of PageFreezer. PageFreezer is a SaaS (Software-as-a-Service) application that enables organizations and corporations of all sizes to permanently preserve their website and social media content in evidentiary quality and replay them as if they were still live. Uses for the archived data range from compliance with regulators such as the SEC, FINRA and the FDA to litigation preparedness, evidence capture, call center support and competitive intelligence.