New advertising rule puts onus on firms to monitor social media (IGNITES)

When the SEC’s new advertising rule becomes effective, all eyes will be on social media activity of firm employees. As the use of social media has proliferated and become intertwined with business practices, the rule seeks to address that concern by requiring firm policies to clearly define how social media is to be used. But, it may require such onerous monitoring that firms may decide to outright ban its use by employees to prevent compliance violations and SEC scrutiny. Amy Lynch, FrontLine’s Founder and President, sees firms going in that direction, and comments that employees use of social media platforms could become an operational hassle for firms. Ms. Lynch describes how it would be a difficult task for compliance staff to monitor social media use, such as chat rooms, and how already stretched compliance departments would not have sufficient time for effective oversight. See IGNITES (subscription required), “Ad Rule May Push Shops to Ban Social Media”