Social Media Compliance Laws for Annuity Companies by Jeff Picozzi

The use of social media has been increasing in many organizations and businesses, and while annuity companies are latecomers to the social media party, it seems they are starting to pick up the pace. The use of social media tools such as Twitter and Facebook for business purposes has had an effect on annuity companies, and in many cases, companies have found new clients and opportunities through social media. When annuity companies choose to use social media for business purposes, they need to be aware of the related compliance laws.

In 2010, the Financial Industry Regulatory Authority (FINRA) decided that there would be no distinction between traditional communication and communication on social media. According to Sutherland Asbill & Brennan LLP, in 2013, FINRA issued $15.1 million in fines related to violations in electronic communication, including social media. This is a 132 percent increase from 2012. Some of the fines include a $9 million charge for not complying with archiving rules and $10,000 for misleading tweets.

Companies that plan to communicate with their customers or associates through social media sites must ensure that they retain the business records of those communications in accordance with Rules 17a-3 and 17a-4 under the Securities Exchange Act of 1934 as well as NASD Rule 3110, according to FINRA. The Securities and Exchange Commission and FINRA rules require that the content of the communication be determinative, and a broker-dealer needs to retain electronic communications that relate to its business for record retention purposes.

Social Media Policies and RIM

Grant Thornton and the Financial Executives Research Foundation found that in 2012, 76 percent of companies did not have a defined social media policy, and 42 percent of respondents said that no one in their organization is responsible for monitoring compliance laws for social media. Considering the hefty fines associated with noncompliance, it is imperative that companies act now to make compliance in electronic communication, including social media, a higher priority.

According to the 2013/2014 Information Governance Benchmarking Survey for Financial Services and Insurance, only 2 percent of respondents rated their records and information management (RIM) maturity as transformational. A further 17 percent rated theirs as proactive. It is vital for annuity companies to include a plan for managing social media records as part of their RIM and information governance programs to fully achieve compliance, avoid fines and maximize the benefits of using social media for business purposes.

If companies do not have the internal expertise to achieve compliance on their own, they can partner with an experienced vendor that can make sure no aspect of the enterprise RIM program is overlooked. For more information and guidence, see our article The Current State of Social Media Compliance.

LINK:	http://blogs.ironmountain.com/2015/industry/insurance/social-media-com...
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