The social media

I have always been an early technology adapter, downloading stock quotes and charts since 1982. In the early 90's I was a branch manager and asked to do a presentation on technology for my firm's regional meeting. When I explained how I was able to email stock quotes at the end of every month to a husband and wife, both scientists, who imported them into their software to keep track of portfolios, the compliance officer was appalled. She asked me how I would keep track of things if my brokers used email. I told her that I would have them push "print." She asked me how I would know if they were sending emails without my knowledge. I told her that I wouldn't know if they were sending regular mail without my knowledge. Then, with the usual caveats about how I didn't understand our litigious society (I had managed the Pru office during the limited partnership debacle) and that it was for my own good, she refused to allow me to use email.

My clients moved their million dollar account to Schwab, but another important change was going on. Technology was changing the business. It was inevitable that we would all use these tools. But when we began to use email regularly it was regulators, not those of us in the business who made the rules. Discount brokers, online websites like Motley Fool and penny stock promoters were all over the internet as regulators silenced professionals in order to "protect” the public.

The same process is going on right now with social media.

From the Raymond James Annual Compliance Interview:

“Do you understand that current firm policy prohibits the use of instant messaging as a method for communicating with clients about securities-related issues? The same prohibition applies to securities related bulletin boards, chat rooms, and social networking sites such as My Space, Facebook and Twitter “

From Jim Cramer:
• Name TheStreet.com
• Location New York, NY
• Web www.thestreet.com
• Bio The official Twitter account of TheStreet.com. Follow us for the latest news and analysis on the financial markets from 14 wall street


Clearly social media represent serious issues, just as email did in 1992. But the tail should not wag the dog. Sales, marketing and research should decide how they can use tools such as Twitter. THEN compliance and IT should find ways for these communications to occur in a compliant manner.