In a bold move, the Securities Division for the Commonwealth of Massachusetts announced guidelines on the use of social media for state investment advisors who were previously permitted to market their services on social networks, such as LinkedIn, Twitter and Facebook, without social media guidelines. Coming just two weeks after the SEC issued its own set of social media guidelines, the Division’s actions have raised the bar for other states to take similar action for the protection of investors.
Though many investors think that all investment advisors are regulated by the SEC, the reality is that the SEC only regulates investment advisors who manage $25 million or more in client assets. For investment advisors managing less the $25 million in client assets, the responsibility of regulation is left to the securities regulator for the state where the adviser has its principal place of business.
In July of 2011, the Massachusetts Division conducted a survey of investment advisers registered and doing business within the Commonwealth to “to determine the scope of investment advisers’ use of social media, and what, if any, record retention and supervisory procedures have been implemented or utilized by those advisers.” Seven-nine percent of the 576 investment advisers registered with the Division responded to the survey.