Recent legislation passed by the state of Maryland that prohibits prospective employers from requiring the usernames and passwords of potential employees may set up privacy tenets that run against FINRA’s social media rules.
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Such legislation is expected soon to be passed in Illinois, California, Delaware, Massachusetts, Minnesota, and New York. Similar legislation at the federal level is also being considered. Demanding access to a prospective employee’s social media accounts is an invasion of privacy according to the legislation.
The requirements by FINRA and other regulatory bodies to monitor employee activities through social media outlets such as Facebook and LinkedIn may inadvertently conflict with the new privacy laws. Such supervision is allegedly critical to compliance to supervisory mandates by regulators.
Yet FINRA claims it never mandated such monitoring; it only stipulates that advisor usernames and passwords be on file in case the accounts need to be accessed. For example, if a red flag arises about an advisor’s activities, that advisor’s social media accounts may be accessed during an investigation of possible wrongdoing.
The new statutes may offer loopholes that allow investigation based on regulatory concerns but the parameters for such investigations are not clear. There are no specifics to guide firms in the information required before an investigation ensues or what may or may conflict with the new privacy laws.
As well, outsourced resources that work with advisors may be exempted from the regulatory requirements. On the privacy front, outsourced independent contractors may insist on the privacy protection allowed under the new legislation
Staying informed on legislative efforts involving social media as well as regulatory developments related to its use can keep you prepared and help you make your social media involvement more effective. It also can keep you compliant in an ever-changing reglatory environment.