Vol. 44 No. 19 November 9, 2011

∗ F. MARTIN FOX, Assistant Vice President, and JACK P. HUNTINGTON, Senior Vice President, are members of the Regulatory Administration Group of Citi Investor Services. BRUCE TREFF is Managing Director of Regulatory Administration and Compliance Support Services for Citi Investor Services. Their e-mail addresses are, respectively, martin1.fox@citi.com, jack.p.huntington@citi.com, and bruce.treff@citi.com. Other contributors to this article are listed at the end.

IN THIS ISSUE

● USE OF SOCIAL MEDIA BY INVESTMENT ADVISERS

November 9, 2011 Page 237

USE OF SOCIAL MEDIA BY INVESTMENT ADVISERS Social media use by investment advisers and broker-dealers is growing rapidly and that has raised compliance concerns with regulators. Issues that arise may relate to advertising, recordkeeping, supervision, third-party communications, and non-public information. The authors review these issues and outline compliance policies and practices firms should adopt to prevent securities law violations arising from social media applications.

By F. Martin Fox, Jack P. Huntington, and Bruce Treff *

As new technologies make the world seem smaller and smaller, businesses are trying to leverage them to make their profits larger and larger. Key among those new technologies are certain internet-based applications, collectively known as “social media.” Utilities such as Facebook, Twitter, and LinkedIn have enabled companies to interact with millions of existing and potential clients around the globe, in “real-time.” Recognizing this potential, investment advisers have increasingly begun to include social media in their business and marketing strategies. From brand awareness to client communications . . . the potential benefits from the strategic use of social media can be significant.

There are, however, numerous regulatory and compliance considerations associated with the use of social media, especially for highly regulated companies such as those in the financial industry. Investment advisers wishing to take advantage of social media must

ensure that they comply with the regulations that govern their communications with the public. Ideally, investment advisers should formulate comprehensive social media policies and procedures before adding these new utilities to their business plans. A working knowledge of the various social media applications, their potential benefits, and the compliance challenges associated with them, is essential in formulating such policies and procedures.

INVESTMENT ADVISER USE OF SOCIAL MEDIA By allowing businesses to engage in real-time

communication with large pools of existing and potential clients, social media applications have become extremely attractive alternatives to costlier, less efficient forms of communication, such as direct mail, telephone solicitation, and other traditional advertising methods.

Until recently, many investment advisers had been reluctant to venture into the social media arena, citing

November 9, 2011 Page 238

concerns regarding compliance with federal laws and regulations.1 In fact, many firms continue to refrain from implementing social media into their business models, opting to wait until the regulatory landscape becomes more settled. However, those firms are quickly becoming the exception, not the rule. The overall trend reveals that companies in the investment management industry are increasingly employing social media to enhance their marketing and client communications efforts. For example, a recent survey found that nearly 70% of asset managers utilized social media in 2011, compared to just 31% the previous year.2 It has reached the point where many in the financial industry now perceive social media as being indispensible business tools, essential to attracting new clients and retaining existing ones.3

The three social media applications most commonly used by investment advisers today are Facebook, Twitter, and LinkedIn. Facebook is the most prolific social network site in the world, claiming over 800 million users worldwide.4 Facebook’s key features allow users to maintain lists of friends or colleagues, and to share content and commentary with them. Facebook also allows for the formation of “groups,” which can be used for business or marketing purposes.5 A recent study found that over 38% of asset managers who utilize social media maintain a presence on Facebook,6 a list that includes many of the largest companies in the mutual fund industry, including Vanguard, Fidelity, American Funds, and PIMCO.

————————————————————

————————————————————

RSCR Publications LLC Published 22 times a year by RSCR Publications LLC. Executive and Editorial Offices, 2628 Broadway, Suite 29A, New York, NY 10025-5055. Subscription rates: $1,197 per year in U.S., Canada, and Mexico; $1,262 elsewhere (air mail delivered). A 15% discount is available for qualified academic libraries and full-time teachers. For subscription information and customer service call (866) 425-1171 or visit our Web site at www.rscrpubs.com. General Editor: Michael O. Finkelstein; tel. 212-876-1715; e-mail mofinkelstein@hotmail.com. Associate Editor: Sarah Strauss Himmelfarb; tel. 301-294-6233; e-mail shimmelfarb@comcast.net. To submit a manuscript for publication contact Ms. Himmelfarb. Copyright © 2011 by RSCR Publications LLC. ISSN: 0884-2426. Reproduction in whole or in part prohibited except by permission. All rights reserved. Information has been obtained by The Review of Securities & Commodities Regulation from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, The Review of Securities & Commodities Regulation does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions, or for the results obtained from the use of such information.

1 Jackie Noblett, “Social Media Wins Scores of Industry Converts: Study,” Ignites (Aug. 10, 2011).

2 Id. 3 Joseph A. Giannone, “Baird seeks brokers for a new generation

of clients,” Reuters (June 20, 2011). 4 Eric Zeman, “iOS 5: Why Integrate Twitter and Not Facebook?”

InformationWeek (June 8, 2011). 5 David Armano, “5 Social Business Use Cases For Facebook

Groups,” Edelman Digital (Oct. 21, 2010). 6 Melanie Waddell, “Social Media Use Among Asset Managers

Takes ‘Giant Leap,’ Cerulli Finds,” AdvisorOne (Aug. 9, 2011).

The tiny, 140-character messages generated through Twitter are beginning to have an oversized impact on the financial industry. Boasting over 200 million users worldwide, Twitter is fast becoming the real-time communications “tool of choice” of many financial industry professionals. Users of Twitter also include some of the biggest names in the financial industry, including the SEC.7

LinkedIn is an internet-based professional network and has become the second most popular social network platform in the United States.8 Like Facebook, LinkedIn allows users to create and maintain a network of professional colleagues, and provides a platform for presenting information regarding a company’s goods and services. Among asset managers who employ social media, 38% maintain a presence on LinkedIn.9

The ability to interact with communities consisting of millions of people in a cost-efficient, real-time format, presents an almost irresistible opportunity for investment advisers. Before integrating social media into their business plans, however, firms should be aware of, and plan against, the possible regulatory and compliance consequences of their use.

COMPLIANCE CONSIDERATIONS AND BEST PRACTICES

Recognizing the increased use of social media in the industry, the SEC and the Financial Industry Regulatory Authority (“FINRA”) have begun to focus more closely on such activity. Because there have been few enforcement actions relating to social media use, the tangible evidence of this increased scrutiny has, thus far, come mostly in the form of inquiries and official statements from the agencies themselves.

7 John Waggoner, “Mutual funds companies embrace Twitter, Facebook,” USA TODAY (Sept. 20, 2010); John Corrigan, “SEC tries to boost transparency with Twitter,” Los Angeles Times (Apr. 28, 2009).

8 Brandon Griggs, “LinkedIn passes MySpace as No. 2 U.S. social network” CNN.com (July 11, 2011).

9 Waddell, supra n. 6.

In late 2010, the SEC sent a “sweep” letter to registered investment advisers, requesting information on their use of social media.10 The sweep letter focused on, among other things, the recordkeeping, training, and supervisory policies of investment advisers with regard to their social media activities. Specific items requested from advisers included: (i) documents describing a firm’s use of social media; (ii) policies and procedures covering the use of social media by a firm; (iii) policies and procedures regarding the use of social media (business and personal) by individual employees of a firm; (iv) documentation on employee training regarding social media use; (v) documentation of disciplinary actions related to the use of social media; and (vi) record retention policies and procedures relating to a firm’s social media use.

Prior to the sweep letter in January 2010, FINRA issued a Regulatory Notice addressing the use of social media in the financial industry.11 The FINRA Notice provided guidance on the application of existing FINRA rules to the recent social media activities of its members. The stated goal of the FINRA Notice was to require broker-dealers to effectively supervise their use of social media and to minimize the likelihood that false or misleading statements would be distributed through these new technologies.

Some key issues addressed in the FINRA Notice include recordkeeping, the supervision of users and content, and the handling of third-party content. In August 2011, FINRA clarified much of what was presented in the FINRA Notice and even responded to questions regarding the application of FINRA rules on recordkeeping, supervision, and content requirements to social media communications.12

Although investment advisers are not subject to FINRA oversight, unless dually registered, the FINRA Notice is an important source of information and guidance for investments advisers – especially given the lack of specific regulations, enforcement actions, or published guidance from the SEC.

———————————————————— 10 Chad Bockius, “SEC Swept Up by Social Media (Part 1),”

Socialware Blog (Mar. 1, 2011). The sweep letter is not available on the SEC website.

11 FINRA Regulatory Notice 10-06, “Social Media Web Sites – Guidance on Blogs and Social Networking Web Sites,” (Jan. 2010).

12 FINRA Regulatory Notice 11-39, “Social Media Websites and Use of Personal Devices for Business Communications,” (Aug. 2011).

As the use of social media becomes more commonplace in the financial industry, this regulatory scrutiny from the SEC and FINRA is likely to increase. It is critical, therefore, that investment advisers establish and maintain comprehensive policies and procedures to guide their use of social media. Based on the recent statements and inquiries from the SEC and FINRA, the following is a review of some of the considerations that investment advisers should address when integrating social media into their business operations and compliance programs.

Advertising

Advertising by investment advisers is governed by Rule 206(4)-1 under the Investment Advisers Act of 1940.13 Under this rule, investment advisers are prohibited from using advertisements that contain any untrue statement of material fact or that are otherwise misleading. In addition, investment advisers are generally prohibited from publishing, circulating, or distributing advertisements that contain, among other things, (i) testimonials about the investment adviser and (ii) references to past recommendations of an adviser. A significant portion of the guidance provided to advisers relating to testimonials and past recommendations has been promulgated in various no-action letters published by the SEC.14

Much of the information disseminated by financial firms via social media may be considered “advertising” by the SEC.15 As such, the content of a firm’s social media postings must comply with the Advisers Act.

For example, an investment adviser’s use of the “Get Recommended” feature on LinkedIn, and “Become a Fan” or “Like” features on Facebook, may be considered testimonials or recommendations which, as mentioned above, are prohibited under the Advisers Act.16 Consequently, investment advisers are encouraged to consider implementing policies that prohibit their employees from utilizing such features. Failure to do so may result in the deliberate or inadvertent distribution of

———————————————————— 13 17 C.F.R. 275.206(4)-1 (2010). 14 See, e.g., Investment Adviser Association (Dec. 2, 2005);

Cambiar Investors, Inc (Aug. 28, 1997); and Denver Investment Advisers, Inc (July 30, 1993) (testimonials); The TCW Group, Inc. (Nov. 7, 2008) and Franklin Management, Inc (Dec. 10, 1998) (past recommendations).

15 Stephanie Sammons, “Social Media: Look before Leaping,” InvestmentNews.com (July 24, 2011).

16 Zach Miller, “Adviser Use of LinkedIn May Violate SEC Rules,” New Rules of Investing (Mar. 22, 2009).

November 9, 2011 Page 239

testimonials and/or recommendations, in violation of the Advisers Act.

Similarly, under FINRA’s social media guidance, a broker-dealer’s participation in an interactive electronic forum (i.e., Facebook discussions or LinkedIn “Q&A”) may be considered a “public appearance.”17 In addition, blog and Twitter posts have been deemed to be “advertisements” under FINRA’s rules.18 These determinations have made it necessary for broker-dealers to carefully draft their blog and forum commentary in order to avoid violating the various FINRA rules regulating the content and dissemination of advertisements and public appearances.

Investment advisers who wish to formulate conservative, comprehensive social media strategies may consider incorporating various aspects of these FINRA requirements into their policies and procedures. The provisions of such policies may include: (i) the oversight of employees’ social media communications; (ii) the supervision of discussions in interactive electronic forums, and perhaps even (iii) the formal approval of each blog post, prior to its use.

Investment advisers to mutual funds who post information on their funds via social media should ensure that those communications comply with the regulations governing mutual fund advertising. Mutual fund advertising is governed by the FINRA rules (for advertising by broker-dealers), as well as rules promulgated under the Securities Act of 1933 and the Investment Company Act of 1940.19 These rules, among other things, (i) regulate the content and format of mutual fund advertising;20 (ii) require that certain disclosures accompany mutual fund advertising;21 and (iii) outline the factors to be considered in determining what might constitute misleading mutual fund advertising.22 The social media policies and procedures for advisers to registered mutual funds should be drafted to ensure compliance with these regulations.

————————————————————

————————————————————

17 FINRA Regulatory Notice 10-06, supra n. 11 at 5. 18 Id. 19 GAO-11-697, “Mutual Fund Advertising: Improving How

Regulators Communicate New Rule Interpretations to Industry Would Further Protect Investors,”(July 26, 2011), available at http://www.gao.gov/new.items/d11697.pdf.

20 17 C.F.R. 230.482 (2010). 21 17 C.F.R. 270.34b-1 (2010). 22 17 C.F.R. 230.156 (2010).

Finally, investment advisers who service “private placement” funds (i.e., hedge funds, private equity funds) should consider Regulation D’s advertising guidelines before discussing such products on social media platforms. Regulation D of the Securities Act provides a safe harbor exemption from registration for issuers of securities provided the conditions set forth in Rule 502 are satisfied.23 Specifically, Rule 502(c) prohibits the advertising or promotion of securities offered through private placements.24 The rule’s prohibition against “general solicitation or general advertising” would likely apply to the dissemination of private placement information via social media. Social media communications regarding private placements should, therefore, be closely scrutinized by investment advisers, to prevent the inadvertent distribution of “advertising,” as defined by Regulation D, and it may be prudent to avoid mentioning private placements entirely.

At a minimum, investment advisers should closely monitor all of their communications made via social media, to ensure that they conform to the advertising regulations contained in the Advisers Act, as well as any other regulations governing the advertising of their particular investment product.

Recordkeeping

Certain communications made by investment advisers are subject to the recordkeeping requirements in Rule 204-2 under the Advisers Act. Rule 204-2 requires, among other things, the retention of advertising and investor recommendations.25 Because much of the information disseminated through social media could be considered advertising or investor recommendations, investment advisers must ensure that their social media policies and procedures contain provisions regarding the retention and maintenance of such electronic communications in accordance with the Rule.26

Prior to engaging in the use of social media, investment advisers should consider the costs and logistics of maintaining compliance with Rule 204-2. For example, advisers must gauge the costs of developing, implementing, and testing comprehensive recordkeeping policies and procedures to govern the retention of their social media communications. In addition, advisers must be prepared to incur the costs associated with the archiving of all of their relevant

23 17 C.F.R. 230.502(2010). 24 17 C.F.R. 230.502(c) (2010). 25 17 C.F.R. 275.204-2 (2010). 26 FINRA Regulatory Notice 10-06, supra n. 11 at 3.

November 9, 2011 Page 240

social media communications, in an accessible manner,27 as well as the retention of the content posted by third parties on company websites or social media pages.28

The decentralized nature of social media communications and the varied formats in which they are sent and received may pose significant technical challenges for investment advisers attempting to comply with these recordkeeping mandates. In response to this need, certain companies are developing solutions to assist advisers in the collection and archiving of social media content.29 Investment advisers with significant social media activity should consider working with such service providers to ensure compliance with Rule 204-2 and any other relevant recordkeeping rules and regulations.

Supervision of Social Media Sites and Content

FINRA’s rules mandate that certain broker-dealer communications be subject to supervision and/or approval.30 These rules require that such client communications either (i) be approved by a registered principal of the firm, or (ii) be monitored. The FINRA Notice specifically applies these existing rules to the content communicated by broker-dealers via social media. Although the Advisers Act does not contain specific monitoring or approval requirements, investment advisers may wish to incorporate FINRA-like supervision provisions into their social media policies and procedures.

When determining whether a particular social media communication would be subject to FINRA’s supervision requirements, a broker-dealer must first determine whether the information is “static” or “non-static.”31 FINRA requires broker-dealers to impose a stricter level of supervision over the dissemination of “static” information than it does for “non-static” information.32 Under the FINRA rules, “static content” (i.e., profile data and background information on Facebook and LinkedIn) posted on a firm’s social media home page would be considered “advertising,” and

therefore must be formally approved by the company prior to being posted.

————————————————————

————————————————————

27 17 C.F.R. 275.204-2 (2010). 28 Id. 29 “Interactive Advisory Software Partners with Smarsh to Assist

Financial Advisors with Social Media Communication Compliance,” Business Wire, Inc. (Aug. 1, 2011).

30 FINRA Manual, NASD Rules 2210 and 3010. 31 FINRA Regulatory Notice 10-06, supra n. 11 at 5. 32 Id.

33 Conversely, real-time “non-static” communications (e.g., interactive posts on Twitter, Facebook, and LinkedIn) are not considered to be advertising and, thus, do not need such approval.34

To prevent damaging or misleading content from being disseminated, or otherwise prevent violations of the Advisers Act, investment advisers may wish to employ real-time surveillance to monitor their social media communications. Until they have implemented such monitoring systems, advisers should consider placing significant restrictions on the use of social media by their employees. Additionally, advisers should consider limiting employee access to social media, allowing access to only those employees who have received proper training and who are subject to adequate oversight.

At a minimum, investment advisers should develop comprehensive policies and procedures for monitoring and supervising the social media activities of their employees. Such policies and procedures should, among other things: (i) prohibit the use of social media for business conducted outside the adviser’s supervision; (ii) verify that personal accounts are not being used for business purposes; and (iii) contain requirements that employees undergo training regarding the proper use of social media.

Third-Party Communications

FINRA requires broker-dealers to monitor certain information communicated by third parties via social media.35 These communications include, among other things: (i) investor commentary on content posted by the broker-dealer; (ii) the participation in online discussion groups by members of the public; and (iii) information posted by unaffiliated service providers about the products and services offered by the broker-dealer. For the third requirement, under FINRA’s rules broker-dealers are required to monitor third-party communications about their firms, both on the firm’s website and on the websites of unaffiliated parties. Investment advisers wishing to implement comprehensive social media policies should consider a similar monitoring process if they use marketing advisory firms, such as solicitors.

Although typically not considered to be “official communications” of a firm (and thus not subject to

33 Id.; see also, NASD Rule 2210. 34 Id.; see also, NASD Rule 3010. 35 FINRA Regulatory Notice 10-06, supra n. 11 at 7.

November 9, 2011 Page 241

FINRA’s principal approval, content, and filing requirements), third-party communications may, in some cases, become attributable to a firm.36 This attribution, known as the “entanglement theory,” can occur if the firm participated in the preparation of the content posted by the third party.37 Communications may also become attributable to the broker-dealer if the firm has been deemed to have endorsed or approved of them. This attribution is known as the “adoption theory.”

To ensure that third-party content does not inadvertently become attributable to the firm, investment advisers should establish “posting guidelines” for individuals and entities who wish to post commentary on company-sponsored websites. Advisers should also establish a process for monitoring, analyzing, and when necessary, removing third-party content that appears on their websites.

Public v. Non-Public Information

Another effective way for investment advisers to communicate information about their products and services is to post such information directly onto their websites. In 2008, the SEC released general guidance with respect to the content appearing on company websites, stating that such content may be subject to the antifraud provisions of the federal securities laws.38 The SEC guidance also stated that certain information posted to company websites might violate provisions of Regulation FD, which places restrictions on the dissemination of “material, non-public information.”

In determining whether or not Regulation FD would apply to specific information on an adviser’s website, the adviser must first evaluate whether that information would be considered “public.” If the company determines the information to be “public,” it is generally free to post it on its website. If, however, the data were determined to be “non-public,” disclosure of that information on a publically available website would likely violate the Regulation FD.39 This same analysis should also be performed for information distributed via social media. Investment advisers should implement processes and procedures for reviewing all information

to be posted on their websites and social media applications in order to avoid any Regulation FD violations.

———————————————————— 36 Id. 37 Id. at 8. 38 Commission Guidance on the Use of Company Web Sites, SEC

Rel. No. 34-58288 (Aug. 7, 2008), available at http://www.sec.gov/rules/interp/2008/34-58288.pdf.

39 Joseph C. Marrow, “Securities Regulation and the Use of Social Media by Public Companies,” Morse, Barnes-Brown & Pendleton, PC (Sept. 2009).

Application and Testing of Social Media Policies and Procedures

Social media policies and procedures should be drafted with enough specificity to ensure that the mandates of the company are met. They should also, however, be broad enough to cover the wide range of possible media, current and future, that could be used to communicate information about the company, its business, and its clients.

Based on the discussion above, a firm’s social media policies and procedures should describe, in detail, the practices the firm has prohibited, including, for example, the use of testimonials, recommendations, or material non-public information. Policies on recordkeeping should include measures designed to ensure that any business communication made by an employee is retained, retrievable and supervised, whether disseminated from a work device or personal device. Regarding the control of non-public information, policies should prohibit the posting of any information related to specific holdings, or allocations, of any clients without prior approval. Policies addressing the supervision of social media content should include any pre-approval/approval requirements for posts to social media sites.

As part of a firm’s compliance program, social media policies and procedures should be regularly tested to confirm that they are reasonably designed to prevent, detect, and correct violations of the Advisers Act and other regulations. To confirm that a firm’s employees have not violated the policies and procedures, this testing should be designed to sufficiently review employees’ personal social media activities and should include internet searches of employee names. The testing should routinely include personnel who have access to material non-public information, and should include other personnel on a random, rotational basis. At least annually, employees should be required to provide a list of social media sites they utilize for any business communications and other use (including any outside business activities) and attest that they have abided by the firm’s social media policies and procedures for business and personal use.

EMERGING REGULATORY LANDSCAPE The sweep letter served as a “shot across the bow” of

investment advisers, alerting them to the fact that regulators intend to apply closer scrutiny to their use of

November 9, 2011 Page 242

social media.40 The recent statements and actions of the SEC and state agencies indicate that significant regulatory developments may be looming in the near future.

Potential Rulemaking by the SEC

The SEC currently applies existing securities rules to the social media activities of investment advisers because, as yet, no specific social media regulations have been issued. However, the SEC has stated that the use of social media by registered investment advisers and their representatives would be subject to increased scrutiny going forward.41 Many in the industry have interpreted the SEC’s recent statements and its sweep letter as evidence that the SEC may be planning to formulate new regulations in the near future.42 Others have speculated that the information gathered by the sweep letter may result in “rulemaking by deficiency letters.”43

State Regulation on the Horizon

In May of 2011, the Massachusetts Securities Division mailed all Massachusetts-registered investment advisers a mandatory “survey” to determine the extent to which they utilized social media.44 Results of the survey, released on July 6, 2011, demonstrate an increased use of social media among state-registered advisers.45 In response to the survey, the Massachusetts Secretary of State has called for the creation of a

working group to further study the social media activity of investment advisers in the State, and to provide guidance or best practices on the use of social media by state-registered advisers.

————————————————————

————————————————————

40 Both the SEC and FINRA have held breakout sessions/round tables on social media at member meetings. See, Agenda for “CCOutreach BD National Seminar” (Feb. 8, 2011) Agenda, available at http://www.sec.gov/info/cco/ccoutreach-bd-ns.pdf and “FINRA Annual Conference Agenda” (May 2011), available at http://www.finra.org/web/groups/ industry/@ip/@edu/documents/education/p120860.pdf.

41 Carlo V. di Florio, Speech, “Remarks at the IA Watch Annual IA Compliance Best Practice Seminar,” 13th Annual IA Compliance Best Practices Summit 2011 (Washington, DC, Mar. 21, 2011), available at http://www.sec.gov/news/ speech/2011/spch032111cvd.htm.

42 Mike Byrnes, “Social Media Compliance is Gray Area,” Financial Advisor (Mar. 8, 2011).

43 Jessica Toonkel, “Advisers' Fear Factor Spikes amid SEC Social-Media 'Sweep,'” Investment News (Feb.16, 2011).

44 “Massachusetts Investment Advisers Quizzed on Social Media,” Boston Herald (May 28, 2011).

45 Office of the Secretary of the Commonwealth of Massachusetts, “Report on Massachusetts-Registered Investment Adviser’s Use of Social Media” (July 6, 2011).

Massachusetts is not the only state to heighten its scrutiny of the use of social media by investment advisers. The Chief of Regulation of Virginia’s Division of Securities & Retail Franchising recently indicated that his office was “looking into” the use of social media by investment advisers under his jurisdiction.46 It seems safe to assume that, as the use of social media by investment advisers intensifies, other states will join Massachusetts and Virginia in stepping up their scrutiny of social media use.

Investment advisers should closely monitor the statements and actions of the SEC, state regulators, and, if appropriate, FINRA to keep themselves informed of any upcoming guidance or rule changes regarding social media. It is likely that new guidance, regulations, and even enforcement activity will arise in the near future. It is critical, therefore, that investment advisers establish and maintain comprehensive social media policies and procedures to ensure compliance with existing and future rules and regulations. Ultimately, those investment advisers who collaborate with experienced service organizations will be more likely to implement their social media programs in an operationally sound and compliance-oriented manner. ■

The following members of the Regulatory Administration Group of Citi Investor Services also contributed to the article: Donna Allouise, Molly Martin Alvarado, William Cady Jr., James Downey, Diane Finn, Rebecca Gilding, Dan Igo, Paulina Krzeminska, Danio Mastropieri, and Ioannis (John) Tzouganatos.

The views expressed in the article may not represent the views or opinions of Citigroup or any affiliate and are not intended to be legal advice.

46 Scott Peterson, “Social Media, Better or Worse? State Securities Regulation of Social Media Raises Questions,” RelayStation (Mar. 17, 2011).

November 9, 2011 Page 243