Don't be scared of Twitter, bankers told over tea and hashtags
Tweeting bankers can wreak havoc in 140 characters. They can also use Twitter to help restore trust in financial services, according to Kitty Parry, founder of the Social Media Charter.
At a seminar in a conference room at the U.K. Houses of Parliament yesterday, Parry pushed the benefits of Facebook posts and tweets as bankers were served scones with jam and clotted cream on silver plates.
“Soon your core customer base will all be communicating on social media,” she told about 100 guests. “If you fail to innovate in this area, you will lose out.”
Social media can be an effective way for banks and investment firms to talk to customers. It's also a potential minefield -- indiscreet Tweets have led to bans and fines in the U.S. -- and many firms ask employees to stay off the forums while at work.
Despite its name and choice of venue, the Social Media Charter doesn't have formal government backing. Parry, a public relations specialist, and her lawyer father are selling a package of guidelines and training to help financial firms navigate the rules.
“The initial reaction to social media was basically to block social media sites,” Antonio Simoes, HSBC Holdings Plc's U.K. chief executive officer, said in a speech at the event. While there are risks, “ultimately we need to trust our people” to use their judgment, he said.
Regulators are attempting to police what's written online without discouraging new forms of communication. The U.K. Financial Conduct Authority this year reviewed its supervision of social media, and will publish the results in 2015.
Younger Audience
Sites run by Facebook Inc., Twitter Inc. and Vine Labs Inc. can be a way for businesses to reach a wider, and younger, audience, the FCA said in an August report, while acknowledging that firms often “perceive difficulties in complying with some of our rules.”
Posts are regulated just like any other communication with clients, and should be “fair, clear and not misleading,” according to the watchdog.
“We do see value in social media, provided it's used responsibly,” Richard Lawes, a senior associate at the FCA, said at the Westminster event.
“Non-compliant” messages were highlighted by the U.K. FCA in its August report, without identifying anyone but based on real posts. A Tweet saying “500 people copy Joe's trades. He made 754% in 1 year,” didn't provide enough warning about the risk of losses, the FCA said.
FCA spokeswoman Zitah McMillan said that “any smart firm will want to get to customers where its customers are.”
There have been examples of improper tweets in the U.S. as well.
On Dec. 4, 2009, California-based stock broker Jenny Quyen Ta posted the following message on her Twitter account:
“Its going 2 b a good Xmas & 2010! Ck out AMD! Like I have said, it should b least a $10B co. which should b $ 15/shs. HappyTrading!”
What she didn't tell her 1,400 or so followers was that she and family members held more than 100,000 shares in Advanced Micro Devices Inc., according to a 2010 notice published by the Financial Industry Regulatory Authority, the U.S. securities industry self-regulator.
Ta agreed to be suspended for a year and fined $10,000 for a series of Tweets and undisclosed websites. Her lawyer, Sylvia Scott, didn't respond to an e-mail seeking comment.
FINRA treats social media posts as business communications, subject to the same rules as a presentation to a roomful of investors.
Hastings Post
It's not just bankers and brokers that face risks online. Reed Hastings, CEO of Netflix Inc., attracted the attention of the U.S. Securities and Exchange Commission when he put user data on his Facebook page in July 2012. The SEC warned Hastings it planned to take action before reversing and dropping its probe in April 2013.
“We do need standards and what better way than the U.K. leading in the development of those standards?” Stuart Popham, Citigroup Inc.'s vice chairman for European banking, said in the final speech of the Social Media Charter conference. “After all, the rules of cricket are all about fairness.”
Social media can be a “jungle” that needs to be carefully navigated, he said. “I wish you all good luck.”