Financial securities regulators are leading the charge against initiatives to prevent companies keeping tabs on employees’ social media accounts, stressing that the potential for abuse takes urgency over worker privacy.
A few states kick started efforts last year to prevent bosses looking up employees on websites such as Facebook or Twitter, however, sections of the financial industry are seeking certain exemptions – citing instances of ‘red flags’ where people could be misusing their personal accounts to spread confidential information.
The Financial Industry Regulatory Authority, or FINRA, is Wall Street’s self regulator, and it thinks for practical reasons some exceptions should be made for the world of finance. Regulators, the Wall Street Journalreports, are concerned that existing and upcoming privacy laws could put investors under financial strain – particularly if trading advice goes viral through social media or in the case of rogue tweets where companies are tipped in an overly favourable light.
The official line of concern is that the virality of social media could make it easier for Ponzi or other fraud schemes to emerge, and harder to police, if attempts to investigate are blocked by state laws.
Before the Californian social media privacy laws came into effect at the beginning of this year, industry group the Securities Industry and Financial Markets Association – SIFMA – was leaning on the state to drop the bill. However, it passed anyway, leading SIFMA to moan that customers are put at risk as it is more difficult to “detect serious problems”.
Similarly, the Financial Services Institute said existing legislation and further changes will be creating a “significant headache for brokerage firms”.