Regulators and industry groups are making progress in ensuring that state legislation designed to protect privacy in social media does not get in the way of advisors’ regulatory compliance, according to an industry official.

Eight states have passed legislation restricting an employer’s ability to ask employees for access to their social media accounts this year, out of about 70 privacy protection bills in 34 states that are currently in the works.  

Seven of these laws (in Arkansas, Nevada, New Jersey, Oregon , Utah, Washington State, and Illinois) pose no regulatory problems for broker-dealers, according to officials. The only state where a law was enacted that is seen as a potential problem is Colorado.
The success in preventing conflicts with advisor compliance can be at least partially attributed to the joint efforts of Finra, the North American Securities Administrators Association (Nasaa), the Securities Industry and Financial Markets Association (Sifma) and other players in the financial services industry educating state legislators, said Kim Chamberlain, Sifma managing director and associate general counsel.
“We think it is incredibly powerful and persuasive that, in this instance, federal and state regulators and the regulated  are all asking for the same thing. How often does [a conflict] happen?” she said.
 Sifma’s concerns are primarily for bills that would apply to current employees because broker-dealers are required under Finra and state requirements to supervise, record and maintain their employees’ business communications, Chamberlain said.
“Broker dealer managers don’t want or need to look at their workers’ (Facebook) information or pictures that are being used exclusively for personal use. However, many employees are using personal social media sites for business purposes and that is when supervision, recordkeeping and maintenance requirements kick in,” she said.
Chamberlain pointed out the eight state social media bills passed this year were double 2012’s total. She is expecting a lot more state legislative activity in this area next year.