SEC Update: 6 Ways For FinServ To Safely Use Social Media

Posted by Emily Lange Rodecker on April 17, 2014



The Securities Exchange Commission (SEC) updated its regulatory guidelines for social media last week, providing clarification on its policies regarding testimonials and advertisements.

In an effort to keep advisers from promoting any material that could be seen as manipulative, fraudulent, or deceptive, the SEC previously prohibited advisers and investment advisory representatives (IARs) from the following:

“any testimonials of any kind concerning the investment adviser or concerning any advice, analysis, report, or other service rendered by such investment adviser.”

Sharing testimonials can be a bit of a grey area when it comes to social media. The nature of many sites and social networks encourage clients to voice their opinions on various products and services. The SEC recognizes there’s no way to control what others post about an adviser or firm on certain sites; what can and should be controlled, however, is the manner in which an adviser or firm publicizes such testimonials.

The term “testimonial” is not explicitly defined, though the SEC’s update notes that its staff considers it to mean “a statement of a client’s experience with, or endorsement of, an investment adviser.”


How can you be sure what, exactly, is seen as “OK” in the eyes of the regulatory body and what is still considered a punishable offense? Here are some guidelines:

  1. If a third-party site, such as Yelp, lists all the reviews – positive and negative – an adviser or firm is welcome to invite people to see what others are saying about them, as the firm has no way of filtering the positive or negative reviews from the public.
  2. If a customer has sung your praises on a third-party site among other negative reviews, don’t extract the positive review as a separate entity or link only to the positive sections.
  3. It is not permissible, however, to link to an adviser or firm’s own Facebook page and point to positive reviews, as those are able to controlled, and therefore could be seen as manipulative.
  4. Financial advisers and firms are now free to allow customers to “like” or “connect” with them on social media, as that is no longer seen as a testimonial.
  5. Advisers and firms should not link to or draw attention to reviews or testimonials from sites with which they have personal affiliations.
  6. It is perfectly appropriate and acceptable for firms and advisers to link to third-party sites where reviews or testimonials are mentioned, as long as the advisers have absolutely no ability to control, edit, or influence which public commentary is included or how it is presented.


What it boils down to is this: if it feels slimy, self-congratulatory, and one-sided – best not to point your audience to it. But if you’ve been praised fairly and feel your services (or those of your firm) are represented in a balanced and objective manner, it’s most likely appropriate to share that information with your audience. If you’re still not sure what’s allowed and what isn’t -- do your homework! To read the SEC’s latest social media update for yourself, you can find it on Gremln’s Financial Industry Social Media Guidelines resource list.

The update on testimonials and social media is another step in the right direction for financial industries’ and regulatory bodies’ acceptance of new media as a method to connect with customers.  To stay up-to-date on the latest news from the financial industry and learn how best to connect with your audience,  be sure to follow @Gremln on Twitter and sign up for our blog newsletter.

Topics: Compliance, compliant social media, financial social compliance, financial social media, social banking, social media compliance, Social Media for Banking, social media regulations

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