NCS warns RIA's about the use of social media

October 05, 2009 -

NCS WARNS RIA’S ABOUT THE USE OF SOCIAL MEDIA

Delray Beach, Florida – National Compliance Services, Inc., a leader in the compliance and regulatory services industry, recently presented a webinar on the compliance pitfalls arising from the use of social media.

Les Abromovitz, an attorney and senior consultant for NCS, conducted a webinar dealing with the compliance problems that may arise when social media is used by registered investment advisers (“RIAs”) and investment adviser representatives (“IARs”). Les’ webinar was sponsored by Shareholders Service Group.

During the webinar, Les warned that the use of social media to communicate with clients and prospective clients may cause RIAs and IARs to breach their fiduciary obligations. Furthermore, using social media for marketing purposes may violate the SEC’s advertising and record-keeping rules.

The use of social media can cause headaches for chief compliance officers (“CCOs”) and may be expensive. CCOs or a designee must supervise communications and advertisements. Furthermore, policies and procedures must be revised to ensure that they address the use of social media by the firm, as well as IARs and associated persons.

Surprisingly, CCOs may need to investigate IARs’ and associated persons’ use of social media, even if the firm does not permit its usage for business purposes.  Compliance personnel should conduct their own due diligence to be certain that supervised persons are not violating the firm’s social media policies and procedures.

Les’ informative webinar will be available soon as a podcast. You can also keep up with compliance issues by visiting NCS’ new blog. NCS Compliance Blog (www.ncscomplianceblog.wordpress.com/category/investment-advisers-broker-dealers/) will address the gamut of compliance issues faced by RIAs and IARs, such as advertising, marketing, disclosure, and the use of social media. The blog will keep RIAs and IARs current regarding important issues on the horizon, including the proposed custody rule and the rapidly-changing regulatory environment in which advisers will operate. The blog will also be useful to registered representatives and other financial advisers who hope to start an advisory firm or join an existing one. Our goal is for the NCS Compliance Blog to be your go-to source for the latest compliance information.

For more information, contact Les Abromovitz by e-mailing him at labromovitz@ncsonline.com or by calling 561-330-7645 Ext. 213. Les is the author of GROWING WITHIN THE LINES: THE INVESTMENT ADVISER’S ADVERTISING AND MARKETING COMPLIANCE GUIDE (NationalUnderwriterStore.com; 800-543-0874; Amazon.com).