The Wall Street Journal is reporting that The Investment Industry Regulatory Organization of Canada is proposing guidelines on how firms can use social-media tools such as Facebook, Twitter, blogs, and chat rooms for marketing and other business purposes.
IIROC proposed amendments Monday that could require firms to design systems and programs for record retention and retrieval for social-media tools, and ensure that recommendations made by financial advisers through these social online tools are suitable to their clients.
Firms will also have to set up policies to make sure that their advisers’ advertisements on these sites aren’t misleading or false.
Dow Jones reported in February 2010 that IIROC, the self-regulatory organization overseeing Canadian broker-dealer firms, is looking to issue more guidance on the use of social media. IIROC’s move comes after its U.S. counterpart, the Financial Industry Regulatory Authority, started subjecting member-firms to record-keeping requirements if they allow advisers use social media.
IIROC said it has received a number of enquiries relating to interactive versus static content and password-protected versus accessible websites.
IIROC is proposing to make all static content such as a profile, background or wall information considered as advertisement to be preapproved. Electronic forums like Facebook and Twitter that involve real-time discussion won’t be subject to the prior-approval requirement.
The proposed additional guidelines will face a 60-day comment period.