In a recent investigation and settlement, the Massachusetts Secretary of the Commonwealth fined a firm for failing to have reasonable policies and procedures in place to detect and monitor a broker-dealer agent’s use of social media accounts. The infamous “Roaring Kitty” investigation found that the firm:
“Failed to have reasonable policies and procedures in place to detect and monitor a broker-dealer agent’s use of social media accounts unaffiliated with (the firm) to achieve compliance with the Act of Regulations. Specifically,...policies and procedures were inadequate to detect...social media activities, including over 250 hours, or 10 days’ worth of YouTube videos detailing investment strategies, at least 590 securities-related tweets on Twitter, and a similar volume of posts on other social media platforms all concerning securities-related information.“
Additionally, these findings stated that the firm:
“Prohibited its broker-dealer agents from discussing generic securities and company business on social media, including specifically YouTube and Twitter. Despite these prohibitions, (the firm) failed to implement policies and procedures reasonably designed to detect, monitor or prevent its broker-dealer agents from discussing securities-related information or company business…”
This settlement resulted in a multimillion-dollar fine, and three years of compliance audits and scrutiny.
Does your firm have reasonable policies and procedures in place when it comes to supervising your agents’ online presence?
Are you actively searching and monitoring the internet in compliance with FINRA rules 3110, 3120, 3130, and 3270?
Detection is key to a reasonably designed web supervision process.
With over 10 years of experience, Eagle Eye has become a trusted partner for firms in establishing policies and procedures, while automating searches and documentation of supervision practices.
Eagle Eye provides everything you need including when a result was found, screenshots of the webpage, who reviewed it, comments that were made, and timestamps on every action taken.
Address issues prior to regulatory discovery or examination.
Contact us today and let us demonstrate how Eagle Eye can support your compliance department while lowering your risk.
About James Cella
James Cella is the President of a growing and innovative compliance technology provider called SiteQuest Compliance. James is a customer-centric individual and focuses on building and sustaining positive and lasting relationship with his clients and partners. James and his family are "super fans" of University of Utah Football and have attended nearly every home game since 2002. Go Utes!