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Securities attorneys in Utah, U.S. watchful of financial advisers’ new permission to tweet

June 24, 2014

Most corporations in America—and across the world, for that matter—recognize how useful social media can be in reaching potential and existing consumers, even if the monetization of social media marketing schemes can look like a long, foggy road. In the stocks and securities industry, investors have been asking for their financial advisers to get on the bandwagon, and Morgan Stanley may finally be making some moves toward joining the social media rush, if a little hesitantly, according to this article in the Wall Street Journal. With all the class action lawsuits swirling around, firms are pretty darn careful about the information they release according to securities attorneys in Utah and on the West Coast who are watching the situation unfold. But the times, they are a-changing.

Morgan Stanley is taking bold new steps in the social media industry. Previously only allowing financial advisers to send out a pre-approved message via Twitter that was in compliance with their Wealth Management Department standards, brokers with at least fifteen followers will now be able to craft their own 140-character (or less) tweets to send out to their investors – after taking an online training course. And after the tweet gets approved by the firm.

The caution may be warranted, securities attorneys in Utah like Douglas J. Shumway and lawyers across the U.S. say. Even though the review process for the Twitter posts could take several hours, the firm is optimistic about its ability to connect with their client base via social media. The approval process cuts down on risk, too, a company spokesperson reported. It “will likely keep advisers out of the quick-moving conversations that often take place on the social media platform,” a delay that can act as a protective factor for the now 1,300 Twitter-trained brokers out of 16,000 working at Morgan Stanley.

Other brokerage firms are testing the waters, too, but most are concentrating efforts to the media platform LinkedIn. Merrill Lynch prohibits advisers from using Twitter and Facebook, for example. Wells Fargo is one of the few other firms that “allows a small percentage of its financial advisers to post messages and Twitter.”

The daring new changes to policy come after the Securities and Exchange Commission recently published a series of Compliance and Disclosure Interpretations (CDIs) regarding the use of social media, including Twitter itself. Not to be considered rules, per se, the CDIs offer guidelines for advisers to communicate with security holders and potential investors, the most cautious of which is to not lose sight of other SEC rules in the social media flurry. Securities attorneys in Utah say that the potential for misleading information in 140 characters (which should always contain a hyperlink) is high, which is why Morgan Stanley is subjecting their tweets to an approval process.

The SEC is also cautioning firms to fully inform the market that it intends to disclose information through social media channels, and to adhere to a strict social media policy and communications plan to avoid liabilities for misinformation. As investors become more social media savvy, so will firms say securities attorneys like Shumway. But the firms better be pretty careful, too.

 

 

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