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Social Media For Business & Regulatory Compliance

Social media must be monitored to ensure regulatory compliance.

Social media channels are offering significant benefits to businesses, allowing companies to interact directly with clients, peers and partners for discussions and sharing of information. Companies are using social media for sales, customer service, marketing, research and other functionality to enhance operations with cost-effective tactics. Being able to access social media components from anywhere has enhanced mobile strategies and kept brands in touch with younger generations of consumers.

Further increasing social media capabilities, the Securities and Exchange Commission recently announced companies can use social media outlets to disclose key information in compliance with Regulation Fair Disclosure so long as investors are aware of the decision and which social media channels are used for the distribution of information. While the decision offers businesses greater freedom in the use of social media channels, it also underscores the value of social media governance to protect messaging and accounts.

Breakdown Of the Announcement
The SEC analyzed a study of Facebook that concluded the Regulation Fair Disclosure regulation applies to social media and other similar communication portals when used by public companies the same way it governs corporate websites. Because corporations own and manage their social media accounts, market moving information can be shared on the platforms when investors are alerted to the disclosure and understand where the data can be accessed.

If investors are not alerted to the social media channel being used, all information disseminated could be considered selective disclosure found in violation of the Regulation Fair Disclosure rule. As the rule is constantly evolving in line with the latest communication tools being created, the SEC said each incident would be evaluated individually before a standardized set of governance can be created. Also, the SEC has not created a formal list of social media channels that are considered acceptable platforms for such communications. In light of the announcement, executives are likely focusing more attention on the rules and protocol managing social media usage and communications.

Acknowledging Risks 
A survey from Deloitte & Touche LLP revealed more CFOs are considering risk management as a high priority as the costs associated with regulatory noncompliance or breaches in security greatly outweigh any expenditures needed to govern operations more effectively. As more requirements and oversight are being implemented in the aftermath of the global financial crisis, companies are looking to increase risk management efforts through continual monitoring and increased regulation.

Social media channels, while user-friendly and cost-efficient, come with regulatory risks and should be strictly monitored by executives. Employees must understand what can and cannot be said on the communication portals, specifically regarding company information and activities. Most companies are investing in training programs that take workers through various scenarios of social media use to point out what behaviors are acceptable and what messaging places the enterprise at risk of regulatory violations. However, executives must also be aware of privacy laws that limit how much oversight the company can have regarding personal employee accounts. Thus, governance should focus on the use of corporate social media accounts, while encouraging staff to limit discussion of business on their own platforms.

Worth The Oversight 
While the rules governing social media use continue to evolve, many executives may start to question the business value of the communication channels. It is sometimes difficult to calculate precise return on investment for a Facebook page or Twitter account. However, recent data from Edison Research found more than 46 million Americans over the age of 12 checked their social media sites several times a day in 2011, and 33 percent of social media users follow a brand on a social network. The continual interaction on the networks provide opportunities to enhance reputations, build trusting relationships and encourage greater interaction between customers and brands. As social media comes at little to no cost, it is hard to pass up the innovative communication channel.