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SEC Clarifies Social Media Requirements

Trying to bring some common sense to the oversight of financial advisors’ use of social media, the SEC has issued guidance on what should and should not be considered an advertisement subject to the 10-day review rule.

FINRA caused concern in 2010 when it stated that interactive content could be subject to the advertisement rule, so the SEC’s clarification was needed — and helpful, even if it is just a start. The requirement for a proper supervisory policy and the need to retain and archive remain, but the SEC noted that incidental use of an investment manager’s name, like when mentioning a charity event, or just using the word “performance” would not raise concerns.

In addition, factual statements about a fund with a link to the fund’s website, as well as language about investment concepts, discussions about topics that could affect investments and commentaries about politics or recent events are not considered advertisement or promotion. Answers to inquiries, as long as they are factual and not promotional, would also be allowed.

The SEC guidance is here.

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