Even as several states have put in place, or are planning, new laws barring employers from monitoring the social media activities of their employees, one Wall Street regulator is seeking exemptions to such rules for some financial services companies.
In letters sent to lawmakers in 10 states earlier this year, the Financial Industry Regulatory Authority (FINRA) is seeking provisions in state laws that would allow Wall Street brokers and dealers to keep an eye on the non-personal social media chatter of their employees. FINRA is the U.S. financial industry's largest self-regulatory organization.
FINRA said it is seeking the exemptions solely to ensure that when stockbrokers talk about stocks on sites such as Facebook, LinkedIn and Twitter, they are complying with their company's policies regarding such disclosure.
"If an employee of a broker-dealer engages in business communications over a social networking site ... the broker-dealer must have access to the account in order to retain records of such communications," FINRA said in the letters.
State laws that bar social media monitoring interfere with this obligation, it noted. "Prohibiting access to these accounts conflicts with a firm's responsibilities to comply with federal requirements and threatens investor protection," FINRA said in its letter, a copy of which was made available to Computerworld.
The Wall Street Journal on Monday was the first to report on Wall Street's efforts to carve out exemptions in state laws on social media monitoring.
Over the past year, several states, including Illinois, California, Maryland, Michigan, New Jersey and Delaware, have implemented privacy laws that bar employers from asking job seekers and employees for usernames and passwords to their personal social media accounts.
The state laws were prompted by concerns among privacy and labor groups that some employers were asking prospective employees for access to their social media accounts as a condition of employment. Maryland's law, for instance, was passed after a controversial incident where a state Division of Corrections worker was asked to provide his Facebook login credentials during a recertification interview.
Similarly, Michigan's law came after an elementary school teacher's aide was fired for refusing to provide school authorities access to her Facebook profile. The request came after a parent complained about seeing what they called an inappropriate photo of her on the social media site.
The Council of State Governments said it has received several reports of people being asked to delete their social media accounts, "friend" the human resources director and/or supply private login credentials to employers.
George Smaragdis, a FINRA spokesman, emphasized that the exemptions it is seeking are consistent with the objectives of the state privacy laws.
"We have never said that firms are required to conduct routine surveillance of representative's personal social media, nor have we said they must obtain passwords and user names to keep on file 'just in case,' " Smaragdis said in emailed comments to Computerworld.
Wall Street firms that prohibit employees from talking about business on social media sites need to have the ability to ensure that employees are complying with those rules, he said. Some firms require employees to certify on an annual or on a more frequent basis that they are acting in a manner that is compliant with all of the company's policies, he said.
Such firms need to have the ability to follow up on any "red flags" that may indicate that an associated person is not complying with firm policies, Smaragdis noted. "Please keep in mind that our social media guidance relates to business communications" only and not personal communications, he added.
FINRA is not the only organization to have raised such concerns. The Security Industry and Financial Markets Association (SIFMA) has been lobbying for changes to state social media privacy laws. In a letter in February to the authors of pending social media law in Colorado, SIFMA argued for the same kind of exemptions sought by FINRA.
The securities industry has no interest in monitoring employee social media accounts that are used only for personal purposes, SIFMA said. However, research has shown that nearly 60% of financial services professionals with social media accounts use them for professional purposes several times a week. Close to one in three use it for business on a daily basis, SIFMA said.
"Business use includes, among other things, reading and posting commentary, monitoring and sharing relevant news, business promotion and brand building, sharing best practices, and obtaining customer feedback," SIFMA noted in its letter. A "personal" account that is used for business purposes must be treated as a business account," and be subject to monitoring, the group said.
Jaikumar Vijayan covers data security and privacy issues, financial services security and e-voting for Computerworld. Follow Jaikumar on Twitter at @jaivijayan or subscribe to Jaikumar's RSS feed. His e-mail address is [email protected].
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