Comments on: Adviser Use of LinkedIn May Violate SEC Rules

By: FP Pad » Blog Archive » Satisfy Compliance Requirements For Social Media Content

Mon, 22 Jun 2009 15:17:25 +0000

[...] I’ve written here previously how FINRA and the SEC may determine that any message disseminated through social media services constitutes marketing and/or advertising and at the very least should be archived and retained in a compliance file. If you are a representative regulated under FINRA, you likely need pre-approval from compliance before posting any messages through social media services. SEC-registered advisers should consult with their Chief Compliance Officer before posting messages as well. [...]

By: FP Pad » Blog Archive » Smarsh Adds Twitter Message Archiving Service

FP Pad » Blog Archive » Smarsh Adds Twitter Message Archiving Service — Wed, 27 May 2009 17:27:30 +0000

[...] Adviser Use of LinkedIn May Violate SEC Rules [...]

By: Bill Winterberg

Bill Winterberg — Fri, 03 Apr 2009 05:08:17 +0000

@Saundra Davis

Excellent! Thanks for the tip on hiding recommendations. Advisers will want to take note how this is done.

Bill

By: Saundra Davis

Saundra Davis — Fri, 03 Apr 2009 04:19:19 +0000

To hide your recommendations:

Edit your profile and scroll down to your recommendations and again select the “edit” box – you will then be able to click/unclick the check box that “shows” your recommendations.

By: FP Pad » Blog Archive » NBA Fines Mark Cuban $25,000 for Twitter Comments; Will the SEC be Next?

Mon, 30 Mar 2009 21:56:34 +0000

[...] using Twitter for failing to comply with regulatory law on the publishing of advertisements? I posted a few weeks ago about my concern of advisers using LinkedIn’s Recommendations feature when it may violate rules against [...]

By: Compliance Building · Compliance and Recommendations on Social Networking Sites

Tue, 24 Mar 2009 11:01:02 +0000

[...] Adviser Use of LinkedIn May Violate SEC Rules by Bill Winterberg of FPPad.com [...]

By: Bill

Bill — Mon, 23 Mar 2009 16:03:56 +0000

Hi Becky,

I don’t think there is a way to completely disable the recommendations feature of LinkedIn. However, I do seem to remember that users can approve or deny recommendations submitted by other connections.

This will allow users to prevent recommendations from getting posted to the main profile page. As always, simply clicking on the recommendations item in the navigation bar opens a window where existing recommendations can be removed.

Hope this helps,
Bill

By: Becky Martz

Becky Martz — Mon, 23 Mar 2009 15:08:16 +0000

Is there a simple way to just disable the recommendation feature in LinkedIn? (I’m a LinkedIn newbie. So I haven’t figured out all the features yet)

By: Susan Weiner

Susan Weiner — Sun, 22 Mar 2009 19:33:11 +0000

By the way, thanks for citing my blog in your post!

By: Susan Weiner

Susan Weiner — Sun, 22 Mar 2009 19:30:29 +0000

Bill,

I agree that advisors should beware. Saying that the SEC should come to grips with recommendations does not make it so.

However, I’ve seen some evidence that the SEC may change, as I mentioned in a 2006 article (http://www.investmentwriting.com/pdfs/20060500_sec_wealth_mgr.pdf)
quoted below.

“Marshall foresees an easing of the prohibition against RIAs using testimonials and examples of specific past recommendations in their marketing materials. He also predicts that managed accounts will attract more regulatory attention. ‘Just because something is popular, it’ll get looked at,’ the former SEC official says.

This is also something I’ve posted about (http://susancfa.blogspot.com/2008/04)/how-financial-advisors-use-linkedin-to.html

By: Dylan

Dylan — Thu, 19 Mar 2009 20:38:11 +0000

The issue isn’t whether someone else makes a testimonial. It’s whether you, as an IA, draw attention to in advertising. Others can say/write whatever they want; IAs just can’t “publish, circulate, or distribute any advertisement which refers, directly or indirectly” to it.

I hope everyone keeps in mind that these are laws are in place for consumer protection (from fraud, deception, and manipulation). I think it is irresponsible to say “I’ll do it until they tell me to stop” or “let it be the one thing they find to write you up for.” What kind of message doe that send to the public about RIAs?

If you want to do it, why not just ask an SEC or state examiner first?

By: Bill Winterberg

Bill Winterberg — Thu, 19 Mar 2009 20:37:11 +0000

@Curt Weil,

Thanks for your comments and feedback. I don’t follow how the examples you cited can help one make a determination regarding the compliance of LinkedIn Recommendations.

Rule 206(4) is very clear: no testimonials of any kind, even if they’re published directly (on your website) or indirectly (LinkedIn Recommendations, in my opinion) by the adviser.

It’s your LinkedIn profile; you manage it. You determine what shows and what does not. Therefore, if you decide to leave Recommendations left by others visible, you are indirectly circulating them.

I can be persuaded on how I interpret this issue, provided the facts on why LinkedIn Recommendations are permissible are well founded. However, the compliance attorneys I’ve consulted have different opinions than the consultant you asked.

Bill

By: Curt Weil

Curt Weil — Thu, 19 Mar 2009 19:03:31 +0000

I just took this to my compliance consultant who asked: did you solicit the endorsements? (No.)Do you refer prospects to them? (No.)Do you have any control over the endorsements? (Yes – at least on LinkedIn, not on Angie’s list.)
His recommendation is to leave them alone; he commented that the S.E.C. needs to come to grips with the new age, and until they require that I cause the endorsements to be hidden, I should leave them. “Let it be the one thing they find to write you up for.”

By: Rich

Rich — Tue, 17 Mar 2009 21:02:38 +0000

This does bring a new dynamic into online social networking. I wonder how this will impact regulation going forward, not to mention monitoring. This would be a great compliance topic for any NAPFA or FPA chapter to host as at a compliance meeting. I’m sure there are many who are in violation, just through ignorance. Thanks Tim for posting this in NAPFA, otherwise, I’d fall into this category.

By: TimK

TimK — Tue, 17 Mar 2009 15:54:05 +0000

Great question. I’ve also wondered about sites such as angies list that rate financial advisors. I cross-posted this to the NAPFA discussion forum…

By: Jude

Jude — Mon, 16 Mar 2009 22:38:12 +0000

Bill I’ve been saying this for a while. I had the developers of a new financial planning portal look into this and they’ve come to the same conclusion. Thanks for bringing this further into the collective conciousness.

By: Tom Gartner

Tom Gartner — Mon, 16 Mar 2009 16:26:44 +0000

Good info as always Bill. I just figured out how to pull my 11 recs down from the site. Too bad, but better safe than sorry. Take care.

By: Damon Deru

Damon Deru — Mon, 16 Mar 2009 15:32:22 +0000

Good post Bill! I think it’s a good reminder, and it’s better to be safe than sorry in my opinion. The last thing an RIA needs right now is a lawsuit due to some two sentence “recommendation” on their Linked-In profile-

By: Russ

Russ — Mon, 16 Mar 2009 15:31:33 +0000

Great post, Bill, and thanks for the information. In an effort to be safe rather than sorry, I too have removed my recommendations from my LinkedIn profile.

Will be interested to see how compliance evolves to consider these great new tools like LinkedIn, Twitter & FaceBook and whether compliance will be able to keep up with the quickly developing technology.