EMPLOYER SOCIAL MEDIA POLICIES REVIEWED

FROM:  U.S. DEPARTMENT OF LABOR

Acting General Counsel releases report on employer social media policies

NLRB Acting General Counsel Lafe Solomon today issued a third report on social media cases brought to the agency, this time focusing exclusively on policies governing the use of social media by employees. 

The Operations Management Memo details seven cases involving such policies. In six cases, the General Counsel’s office found some provisions of the employer’s social media policy to be lawful. In the seventh case, the entire policy was found to be lawful.

Provisions are found to be unlawful when they interfere with the rights of employees under the National Labor Relations Act, such as the right to discuss wages and working conditions with co-workers.

“I hope that this report, with its specific examples of various employer policies and rules, will provide additional guidance in this area,” Mr. Solomon said in releasing the memo. Two previous memos on social media cases, which involved discharges based on Facebook posts, issued in January 2012 and in August 2011.

STOCK SCAMS AND SOCIAL NETWORKS

The following excerpt is from a USA.gov website e-mail: "Stock Scams Go Social The Securities and Exchange Commission (SEC) recently charged a man with trying to sell $500 billion worth of fake securities on the online social network LinkedIn. It’s a reminder that crime goes where the people go, and the people are on social media websites like LinkedIn and Facebook. With this advice from USA.gov and the SEC you can stay safe from online investment fraud. On the Internet, it’s easy for criminals to make attractive websites that make scams look real. Always use caution when considering an investment you found online. Be suspicious of unsolicited offers. If you didn’t ask for it, and you don’t know the source, there’s a good chance of bad intentions. The old rule about too good to be true still stands, even in new media. Compare the promised returns with the returns on well-known stock indexes. Guaranteed returns and pressure to buy right now could be signs of a scam. Tighten your privacy settings. Fraudsters can use your private information to make you think you know them: “Don’t you remember me from college?” Is a financial service provider trying to Friend you? Feel free to say no. Friending someone can mean you let them see everything about you. When you’re on social media, never communicate your bank account or Social Security numbers. Always use more trusted forms of communication with brokers and advisers, like the telephone, letters, or the firm’s official email or website. Be careful about clicking on links by making sure they go to a legitimate source. It’s easy for fraudsters to create a good-looking fake email, hoping you’ll click a link and feed private information into it or unknowingly put malicious software onto your computer. If an email seems to be from a trusted source but the content and spelling mistakes seem out of character, skip the links in the email and go to the website directly yourself. Affinity fraud is what the SEC calls it when the fraudster preys on what you have in common, like ethnicity or religion. Even if you know the person forwarding you a message about an investment opportunity, check out everything. They might have been fooled first. Another trick is manipulating the market with “Pump and Dump.” They’ll say they have “inside information” and talk up a stock that doesn’t deserve it, then sell after everyone buys and the price is high. You can find even more tips for steering clear of online investment fraud by reading Avoiding Fraud (PDF) andUnderstanding Your Accounts (PDF) from the SEC. By using these tips you'll be able to keep your money safe and avoid being a victim of online fraud.”

SEC CHARGES INVESTMENT ADVISER WITH USING SOCIAL MEDIA TO SELL FAKE SECURITIES

The following excerpt is from the SEC website:

“Washington, D.C., Jan. 4, 2012 — The Securities and Exchange Commission today charged an Illinois-based investment adviser with offering to sell fictitious securities on LinkedIn and issued two alerts in an agency-wide effort to highlight the risks investors and advisory firms face when using social media.

The SEC’s Division of Enforcement alleges that Anthony Fields of Lyons, Ill. offered more than $500 billion in fictitious securities through various social media websites. For example, he used LinkedIn discussions to promote fictitious “bank guarantees” and “medium-term notes.” The postings resulted in interest from multiple purported potential buyers.

“Fraudsters are quick to adapt to new technologies to exploit them for unlawful purposes,” said Robert B. Kaplan, Co-Chief of the SEC Enforcement Division’s Asset Management Unit. “Social media is no exception, and today’s enforcement action reflects our determination to pursue fraudulent activity on new and evolving platforms.”
According to the SEC’s order instituting administrative proceedings against Fields, he made multiple fraudulent offers through his two sole proprietorships – Anthony Fields & Associates (AFA) and Platinum Securities Brokers. Fields provided false and misleading information concerning AFA’s assets under management, clients, and operational history to the public through its website and in SEC filings. Fields also failed to maintain required books and records, did not implement adequate compliance policies and procedures, and held himself out to be a broker-dealer while he was not registered with the SEC.
One of the alerts issued today – a National Examination Risk Alert titled“Investment Adviser Use of Social Media” – provides staff observations based on a review of investment advisers of varying sizes and strategies that use social media. In growing numbers, registered investment adviser firms are using social media to communicate with existing and potential clients, promote services, educate investors, and recruit new employees.

“As investment advisers increasingly utilize social media to communicate with clients and potential clients, firms need to be mindful of the applicable standards governing those communications,” said Carlo di Florio, Director of the Office of Compliance Inspections and Examinations (OCIE).

The alert reviews concerns that may arise from use of social media by firms and their associated persons, and offers suggestions for complying with the antifraud, compliance, and recordkeeping provisions of the federal securities laws. The alert notes that firms should consider how to implement new compliance programs or revisit their existing programs in the face of rapidly changing technology.

The SEC also issued an Investor Alert titled “Social Media and Investing: Avoiding Fraud” prepared by the Office of Investor Education and Advocacy. The alert aims to help investors be better aware of fraudulent investment schemes that use social media, and provides tips for checking the backgrounds of advisers and brokers. A new Investor Bulletin titled “Social Media and Investing: Understanding Your Accounts” contains best practices including privacy settings, security tips, and password selection aimed to help social media users protect their personal information and avoid fraud.

“More and more, investors are using social media to help them with investment decisions. While social media can provide many benefits for investors, it also makes an attractive target for fraudsters. The Investor Alert provides some useful tips to help investors look out for securities fraud online,” said Lori J. Schock, Director of the Office of Investor Education and Advocacy.”