FINRA Issues Guidance on Blogs and Social Networking Web Sites

This week, FINRA -- the largest independent U.S. securities regulator -- issued Regulatory Notice 10-06, Guidance on Blogs and Social Networking Web Sites. The Executive Summary provides:

Americans are increasingly using social media Web sites, such as blogs and social networking sites, for business and personal communications. Firms have asked FINRA staff how the FINRA rules governing communications with the public apply to social media sites that are sponsored by a firm or its registered representatives. This Notice provides guidance to firms regarding these issues.

The regulatory guidance helps brokerage firms understand how they may appropriately utilize social media sites for business purposes, while also ensuring investor protection.  In its guidance (laid out in Q&A format), FINRA:

• Discusses a brokerage firm's recordkeeping duties, saying firms must retain all business-related communications made by their "associated persons" via online interactive media sites like Facebook, Twitter, and blogs (referring to Rules 17a-3 and 17a-4 under the Securities Exchange Act of 1934 and NASD Rule 3110).
• Discusses when communications by a firm or its personnel on social media sites might constitute a "recommendation" and potentially trigger the so-called FINRA "suitability rule" (requiring additional disclosures).
• Describes types of interactive electronic forums, such as participation in an interactive electronic forum like chat rooms or online seminars (and sometimes blogs and social networking sites).  Although a registered principal may not have to pre-approve communications made in an interactive electronic forum, those forums are still subject to other supervisory requirements and the content requirements of FINRA’s communications rule.
• Clarifies a brokerage firm's responsibilities with regard to supervising use of social media sites by its "associated persons," getting into some specific duties and required policies and procedures.
• Addresses issues related to third-party posts on a firm's social networking site.  

Please see the regulatory notice for more information. FINRA is also offering a webinar on February 3, 2010 on the new guidance "Compliance Considerations for Social Networking Sites."

New Article: Workplace Consequences of Electronic Exhibitionism and Voyeurism

William A. Herbert, New York State Public Employment Relations Board Deputy Chair, brought to my attention a recent article he authored, “Workplace Consequences of Electronic Exhibitionism and Voyeurism,” which may be downloaded at the Social Science Research Network. A number of authors and commentators have tackled various legal issues related to social media, privacy, and the workplace, but Herbert’s commentary offers a particularly insightful discussion with its special emphasis on the social psychological aspects of the world of Web 2.0. 

"Despite the general reluctance to bare all through old media, new communicative technologies are leading, if not encouraging, individuals to engage in an unprecedented degree of exhibitionism about their personal lives, thoughts and activities to a virtual worldwide audience. Frequently, such communications relate directly or indirectly to work or co-workers and have the potential for causing negative employment consequences." - William A. Herbert in "Workplace Consequences of Electronic Exhibitionism and Voyeurism"

For other posts related to social media and the workplace, click here.

UPDATE: Supreme Court Again Blocks Broadcasting of California Prop. 8 Trial

As I mentioned Tuesday, the U.S. Supreme Court on Monday issued a temporary stay to bar online broadcasting of the Proposition 8 trial in California. Although the stay was set to expire Wednesday, the Supreme Court issued another order (splitting 5-4) staying the district court's January 7, 2010 order to the extent it permitted live streaming of court proceedings. The High Court stayed the district court's order (that would have allowed the broadcasting) because it said the lower court likely violated federal law when it amended its local rules to allow a broadcast of the trial.  The Court said:

We resolve that question without expressing any view on whether such trials should be broadcast. We instead determine that the broadcast in this case should be stayed because it appears the courts below did not follow the appropriate procedures set forth in federal law before changing their rules to allow such broadcasting.

So, the Court didn't really discuss its thoughts on the more specific issue of online streaming. The Court invited the parties to seek a final order by filing a petition for a writ of certiorari or a writ of mandamus (hinting it would likely grant review of either such filing).

SCOTUSblog has a nice summary of the case here.

Hat tip to Tyler C. for giving me the heads-up on yesterday's order!

Supreme Court Stops YouTube Broadcast of Prop. 8 Trial

Just before the trial addressing the constitutionality of California's same-sex marriage ban, the U.S. Supreme Court issued an order temporarily halting an online broadcast of the trial. The trial began yesterday in San Francisco, and the Court's order expires on Wednesday. Read the Los Angeles Times report here.

Use of Social Media Before, During, & After Employment Relationship

Check out "Social Media Permeate the Employment Life Cycle" on The National Law Journal web site, discussing why and how employers should address the use of social media before, during, and after the employment relationship of their employees.

Three More States Ban Texting While Driving

According to this blogger,Illinois, Oregon, and New Hampshire enacted laws that went in effect January 1 banning texting while driving. Mr. Null says 19 states now have such bans.

Check out the Governors Highway Safety Association site for more information on state cell phone driving laws.