The Securities and Exchange Commission (SEC) updated its staff guidance on the obligations of mutual funds and other investment companies to seek review of materials posted on their social media sites. 

The guidance from the Division of Investment Management is the first in its IM Guidance Update series, which will offer the staff’s views on emerging legal issues.  The goal of the guidance is to increase transparency and enhance compliance with federal securities laws and regulations.

Mutual funds and other investment companies are required to file certain advertisements for review by Financial Industry Regulatory Authority (FINRA).  According to the regulator, its staff has learned that out of an abundance of caution, many mutual funds and other investment companies may file materials on their social media sites with FINRA unnecessarily. 

Here is the press release:

---

SEC Press Release Contact: SEC Office of Public Affairs – 202-551-4120
  Web version:http://www.sec.gov/news/press/2013/2013-40.htm
  The IM Guidance Update is available at:http://www.sec.gov/divisions/investment/guidance/im-guidance-update-filing-requirements-for-certain-electronic-communications.pdf
  FOR IMMEDIATE RELEASE                                                                    2013-40

SEC ISSUES GUIDANCE UPDATE ON SOCIAL MEDIA FILINGS BY INVESTMENT COMPANIES

  Washington, D.C., March 15, 2013 – The Securities and Exchange Commission today published a guidance update from its staff to clarify the obligations of mutual funds and other investment companies to seek review of materials posted on their social media sites.  The guidance from the Division of Investment Management is the first in its “IM Guidance Update” series, which will offer the staff’s views on emerging legal issues.  The goal of the guidance is to increase transparency and enhance compliance with federal securities laws and regulations.

Mutual funds and other investment companies are required to file certain advertisements for review by Financial Industry Regulatory Authority (FINRA).  The SEC staff has learned that out of an abundance of caution, many mutual funds and other investment companies may file materials on their social media sites with FINRA unnecessarily. 

The IM Guidance Update provides examples of the kinds of communications that the staff believes would be subject to a requirement to file with FINRA and examples of communications that would not trigger a filing requirement. 

“Today’s inaugural IM Guidance Update on social media is intended to help firms strengthen their compliance efforts by providing meaningful real life examples in a format that is accessible to all on the SEC’s website,” said Norm Champ, Director of the Division of Investment Management.  “We expect future guidance updates will highlight other relevant issues for funds, advisers, and the public.”

Douglas Scheidt, Sara Crovitz, Brian Murphy, and Catherine Courtney from the Division of Investment Management contributed substantially to preparing the IM Guidance Update, as did Paula Jenson, Lourdes Gonzalez, and Alicia Goldin from the Division of Trading and Markets.

The Division of Investment Management works to:
• protect investors
• promote informed investment decisions and
• facilitate appropriate innovation in investment products and services
through regulating the asset management industry.

 

Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE