It’s rare to see guidance from a regulator that results in less paperwork. But that is the likely impact of new guidelines from the U.S. Securities and Exchange Commission on the use of social media by asset management firms.
The SEC recently issued guidelines for when an investment management firm should file content it produces for social media and similar electronic platforms. The guidelines give examples of communications that would not require a filing with the Commission, as well as what types of content should be filed. On the whole, the SEC paper is a helpful guide that should put even the most cautious compliance officer at ease – up to a point.
The guidelines identify routine social media conversations that would not create a filing requirement and likely comprise a large portion of a firm’s social content. At the same time, the guidelines make clear that discussions of a specific fund’s performance or investment merits would need to be filed. The intent is to distinguish between content of a general nature and material that is marketing a fund. Anything that treads close to marketing would clearly require a filing.
But a lot of content will fall outside such clear boundaries. There are certain to be grey areas that will demand careful scrutiny by compliance teams, even with these constructive guidelines. And the prudent course will be to file any content if it falls into this area.
So perhaps its not surprising that social-compliance software is expected to be a $4 billion market by 2016, compared with $788 million today, according to tech research firm IDC.