Regulators Issue Final Supervisory Guidance Regarding Social Media (Fed. Reg.) (with Lofchie Comment and Youtube Selection)

The Office of the Comptroller of the Currency ("OCC") and Financial Institutions Examination Council ("FFIEC") published final supervisory guidance titled "Social Media: Consumer Compliance Risk Management Guidance." "Social media" is broadly defined to include "interactive onlne communication," and services such as LinkedIn, Google Plus, Facebook and Twitter.The OCC stated that technological advancements allow financial institutions to use social media in a variety of ways, including marketing; facilitating applications for new accounts, products, or services; and engaging with existing and potential customers. Due to the dynamic and information nature of this communication medium, the OCC explained that it can present unique risks to financial institutions. The guidance discussed a number of issues including:

• applicability of consumer protection and compliance laws, regulations, and policies to activities conducted via social media;
• potential risk areas including consumer compliance and legal risks; and
• compliance risk management expectations that allow financial institutions to identify, measure, monitor, and control risks related to social media.

Finally, the guidance provided recommendations for an "effective risk management program" which included creating a clear governance structure with clear roles and responsibilities that can be reported to senior management and the board.

Lofchie Comment: The guidance in useful in highlighting a number of the laws that it is possible to break (more than one might expect) and the risks that one might take (clearly more dangerous than water skiing) through the careless use of social media. Although the guidance is not directly applicable to broker-dealers, they also may find it useful.

See: 78 FR 76297; Joint Agency Press Release.See also: Youtube Selection