There is a flood of social networking sites online. Most people are familiar with the most popular websites: Facebook, Twitter, Linked In, and MySpace. Some of the company websites that are available tend to financial social networks. Some of these websites are run by large banks who market to their own clients and other potential clients. There are several financial media sites that allow financial companies to advertise on their site. However, large financial institutions must be aware of the advertisements they publish. They need to make sure that they are obeying the law in all cases or they risk being penalized. This is the case now, especially because of the Dodd-Frank Act intended to create financial oversight for the industry.

The answer for most financial institutions is simply not to post anything on social media without getting prior approval of any posts and tweets from the marketing manager or CFO. There is some overlap on Facebook that has some correlation to the personal identity of users; however, if the company name is used anyway, tacit permission from federal regulators is still required. A financial endeavor on social media may conflict with federal laws designed to protect consumer privacy and regulate SEC communications.

One must ensure that they understand all the compliance laws regarding social media. It is definitely a powerful medium for advertising; however, the problems it presents may not be worth it. Those who have problems on social networking sites should know that their in-house attorney or litigation expert will not be able to help them if they or a facility employee get in trouble for inadvertently posting inappropriate content on a social networking site. The marketing manager needs to read the laws.

There are certain implications with social liberty and protected speech that the law cannot touch.

However, simply advertising on a site may require tweets and ads to comply with SEC guidelines. Using these guidelines will not only prevent you from being penalized by federal regulators, but can also keep your site free from fraud. The guidelines are there not only to provide oversight, but also to prevent fraud from becoming widespread on investment websites. Seeing them as a protective measure can make them easier to adhere to and comply with. They are not all bad.