Click here to view a PDF version of the report (PDF) - Released July 6, 2011
The use of social media by the American public and investment professionals is on the rise. There is a growing trend in today's brokerage industry to use these sites for outreach to existing as well as potential customers. The use of social media for business purposes is also increasing within the investment advisory field. Given this trend, the Securities Division of The Office of the Secretary of the Commonwealth (the "Division") has surveyed investment advisers registered and doing business within the Commonwealth. The purpose of the survey is to determine the scope of investment advisers' use of social media, and what, if any, record retention and supervisory procedures have been implemented or utilized by those advisers. The Division forwarded the social media survey (the "Survey") to 576 investment advisers registered with the Division and located in the Commonwealth. As of today's date 79% of advisers have responded.
The Division, through the Survey, examined whether the advisers used or intended to use social media networks, the types of social media used, and what compliance procedures had been established to secure maintenance of records and to assure supervision and compliance obligations. The responses indicated that 44% of investment advisers used some form of social media and that this usage rate will likely increase within the next year. Investment advisers use Facebook, LinkedIn and Twitter, host their own websites, blog sites, and utilize other social media services. The Survey also suggests that some advisers do not have policies relating to the retention or supervision of social media content, are not retaining social media content, and do not supervise the use of social media content. Based on this analysis, the Division believes that additional regulatory guidance concerning the use of social media would be appropriate to assist Massachusetts-registered investment advisers in maintaining a compliant advisory practice.