| April 1
April 1 New guidance about social media from the
U.S. Securities and Exchange Commission gives certain financial
advisers some leeway to promote client reviews of their services
that appear on third-party social media websites.
The guidance is likely to ease advisers' worries that
reviews by their clients on websites such as Yelp Inc
or Angie's List could violate an SEC rule that forbids
"testimonials," compliance professionals said. The guidance
clarifies that advisers registered with the SEC can point
prospective clients to those reviews in advertisements, subject
to certain conditions.
"It's a pretty big change. It should make some people
happy," said Cathy Vasilev, vice president of Red Oak Compliance
Solutions LLC in Fredericksburg, Texas.
The March 28 guidance is the latest step in a years-long
effort by regulators to weigh in on how financial advisers and
their firms can engage with clients online without running afoul
of industry rules on advertising and communicating with the
The SEC clarified that client reviews do not violate its ban
on client testimonials as long as they appear on independent
social media or review sites. Those sites, however, must let
viewers see all public comments, whether good or bad, related to
the adviser, it said. Advisers must have no sway or control over
For example, the reviews cannot appear in Facebook pages
that advisers create to promote their own businesses. Directing
employees to write reviews or promising discounts to clients in
exchange for positive reviews could spell trouble, the SEC
Restrictions apply to using social media reviews in print,
radio and television advertisements, the SEC said. For example,
advisers cannot publish verbatim reviews from the third-party
sites. They can, however, direct advertising audiences to "see"
the reviews on those sites.
The SEC's guidance is available here: 1.usa.gov/1lAh5NH.
(Reporting by Suzanne Barlyn; Editing by Richard Chang)