Recently there are some interesting compliance related developments from two self regulatory bodies, that have issue guidance on social networking compliance. With the increasingly popular adoption of social networking sites such as Facebook, Twitter, LinkedIn for business and personal communications, it is but natural that regulators and institutions are being forced to take a fresh look at the issues involved and provide some baseline guidance. In some cases they are also adopting these tools themselves to be ahead of the curve as well as experience for themselves the issues involved. A good example being SEC use of Twitter.NASDAQ launch of social network for financial community to help members interact.

NFA - In December 2009, the self regulatory body, National Futures Association (NFA) in a letter to Commodity Futures & Trading Commission set out some compliance restrictions on use of social networking channels such as blogs, chatrooms, forums, Facebook and Twitter by its 4200 member financial firms and 55,000 associates. In NFA’s view online social networking groups do have the potential to impact customers decisions via unsubstantiated rumour spreading and intentional misrepresentations. NFA proposes strict supervision of the content and communications in this regard and also mandatory disclosures for employees who may be participating in any related trading or financial communities.

FINRA - And Tuesday, on 26th Jan, 2010, the US regulatory body FINRA (Financial Industry Regulatory Inc.) that overseas nearly 5000 brokerage firms and 633,00 registered representatives issued guidance to securities firms and brokers on the use of social networking Web sites such as Facebook, Twitter and LinkedIn to communicate with the public. Based on a task force study and recommendation, FINRA issued this notice to guide firms on applying the communications rules to social media sites, such as blogs and social networking sites. At the same time, FINRA is seeking to interpret its rules in a flexible manner to allow firms to communicate with clients and investors using this new technology.

We expect more associations/regulatory bodies across many sectors globally are going to issue similar guidelines on the use of Social Networking sites.  I look forward to your inputs and thoughts based on your own  experiences.  Stay tuned for more on this. To a more responsible blogging and Social Networking !