The SEC is taking a closer look at advisers' use of social media by making their activity part of their annual disclosures to the agency.
In a recently released final rule, the SEC said it is adding to Form ADV a section that asks advisers to list the addresses of their pages on Twitter, Facebook, LinkedIn and other sites. Previously, the document only asked for the address of an adviser's own website.
“Our staff may use this information to help prepare for examinations of investment advisers and compare information that advisers disseminate across different social media platforms, as well as to identify and monitor new platforms,” the rule states.
The rule also amends the ADV to require more data from advisers about their separately managed accounts and a longer list of their branch offices.
Incorporating social media on the ADV, the foundation of the SEC's regulation of investment advisers, is the latest development in the SEC's effort to get a handle on the rapidly growing area.
In 2012, the SEC issued a risk alert indicating that advisers must retain records of their social media communications and warned that advisers' reference to a “like” feature on a third-party website could be deemed a testimonial.
In 2014, the SEC Division of Investment Management issued further guidance on how the agency would interpret the testimonial rule in the context of social media.
FINRA put out similar social media guidance in a 2010 regulatory notice and a follow-up notice in 2011.
With the new ADV rule, the SEC is formalizing the attention it's paying to social media.
With social media addresses appearing on an ADV, it will be easier for the SEC to locate an adviser's online activity.
The new rule is a reminder to advisers that the story of their firm should not vary based on where it's being told.
The agency itself is trying to be consistent in how it regulates advertising regardless of the medium.