A challenge that business entities face is – Marketing Competition. A business has to formulate its marketing strategy and continuously assess its operational relevance. The increasing use of social media platforms by stakeholders makes the social media policy of business important. Entities have to market their brand, product or service in order to capture market share, and this is done by increasing awareness. Social media promotion is economical for companies and has a wide reach.
Social Media Policy
The online presence of entities needs to be governed by robust social media compliance regulations. A firm should frame internal policies to manage its social media presence. Not doing so or any non-compliance with the regulations will result in incurring costs, in terms of: bad reputation, financial penalties, etc.
Financial Industry Regulatory Authority is a non-governmental regulatory body in the US which enacts and enforces regulations and compliance, and governs the entities who need to abide by these regulations. It takes disciplinary actions against illegal actions of entities.
FINRA issued guidelines for public appearance or communication in an online platform, firm’s actions in blogs and social media sites. Firms should formulate regulations for internal control and for their interaction with the public accordingly.
FINRA guidelines state clear disclosure of relevant information. In 2009, a registered principal issued unapproved bulletin board messages without any material disclosure which falsely urged the investors to take action. As a result, FINRA suspended and fined the principal for offending investor protection guidelines.
Third Party Posts
Third party posts are not a part of formal business communication. However, third party communication might impact business. James Craig, a cozener, caused the stock market price of two tech firms to fall by posting misleading statements on twitter. His malicious intention to profit from share transaction caused losses for the companies as well as the investors.
In April 2009, Carol McKeown and Daniel F. Ryan gained around 2.4 millions from U.S. micro-cap companies. They fraudulently touted penny stocks through their website, Facebook and Twitter. Therefore, firms should have supervision procedures and disclosure policies for third party posts.
Firms should regulate the posts made by associates or personnel to secure investors and business reputation. It should authorize or allow persons to post after doing a background check and assessing impact of their communication. Employees having confidential insider knowledge may take undue advantage by making public statements. An employee can indulge in market manipulation and pump and dump scams. Hence, employees should be trained and well-informed.
Data sources should be reliable and accurate. Incorrect data may form undesired opinion of the company in the minds of stakeholders. It may also result in inaccuracy of published financial statements and accounts. Firms should set criteria for data collection and publication. Fraudsters create fictitious accounts on different social media platforms by using company logo. Consequently, this makes the platform unreliable for use for transmitting information. In 2012, a Illinois-based investment adviser was found guilty of trying to sell fictitious securities from his LinkedIn account.
Firms are vulnerable to the social media interactions by its own personnel as well as third parties. Hence, a social media policy specifying standards, procedures and actions, is the need of the hour. Furthermore, a vigilance department, task force or a review committee should check social media communication. Organizations should also formulate a risk management program. FINRA keeps a check on the trending advertising and promotion channels of organizations. Finally, firms should follow the FINRA guidelines and take appropriate actions against offenders.Add to favorites