Securities regulators balk at employee social-media privacy
Despite state laws, Wall Street still wants to spy on employee Twitter and Facebook accounts.
The Financial Industry Regulatory Authority, an independent U.S. securities regulator that seeks to protect investors, is asking lawmakers in around 10 states to amend their legislation to allow financial firms to peak at social media accounts when employee misuse is suspected, a spokesperson told the Wall Street Journal.
The fear seems to be that brokers could use their social media accounts to spread information that would influence stocks, and that misdeeds would go unchecked without monitoring allowances.
At least six states including California, Illinois, New Jersey, and Delware havefrom requiring an employee or applicant to hand over social media account usernames and passwords. Some 35 states have started considering adopting similar social-media legislation since the beginning of the year, according to the Journal.
The Securities Industry and Financial Markets Association unsuccessfully appealed to California Gov. Jerry Brown to veto the social-media privacy law before it went into effect on January 1, 2013. "The bill, while well-intended, conflicts with the duty of securities firms to supervise, record and maintain business-related communications," SIFMA wrote in a letter to Brown.
California, at least, doesn't appear to be budging on its stance to protect all state employees from social-media invasions of privacy. State lawmakers have rejected FINRA's and others' request for special allowances, the Journal said.
Though securities regulators and financial firms may not take kindly being locked out of employee accounts, Wall Street has embraced social media in a different way. Earlier this year, the Securities and Exchange Commission decreed that it was okay for public companies tofirst, so long as investors were told ahead of time where to look for the disclosures.