Is There a Future for Social Networking in the Life Insurance Industry? Jennifer Carroll Archie Latham & Watkins LLP

Transcription

1 Is There a Future for Social Networking in the Life Insurance Industry? Jennifer Carroll Archie Latham & Watkins LLP

2 How is it used? Companies create official profiles and web pages to communicate with investors, customers, and employees. Industry professionals (broker/dealers, registered reps, investment advisors) create personal profiles to connect with prospective and existing clients. Your children we ll leave that one alone.

3 The Regulators and the Regulated Regulations come from: SEC Investment Advisers Act Exchange Act Regulations cover: Broker/Dealers, Registered Representatives, and Investment Advisors. NAIC FINRA FINRA Rules NASD Rules Regulatory notices and Guidelines Statements in the form of advertisements, sales literature, correspondence, or public appearances.

4 Where does Social Media fall? Advertisements Statements made on public sites if your account is open to the public FINRA NAIC Model Guideline Facebook, Twitter, YouTube, and LinkedIn are examples. Sales Literature Statements made on password protected sites or through private accounts. Facebook, Twitter, and LinkedIn.

5 Where does Social Media fall? Correspondence Any letter or sent to one or more existing customers and fewer than 25 prospective customers. Public Appearances Using chat rooms or other interactive platforms is likely to be classified as a public appearance.

6 Possible Issues Testimonials Third-party links Customer specific recommendations Disclosures and product identification. Pre-approval and record keeping

7 Good Examples Sun Microsystems Johnson & Johnson Even the SEC!

8 Problematic Examples Ebay Social Median solicitation The power of the web

9 What should you do? V. Social networking should be viewed much like traditional forms of communication. With the proper training, compliance protocols, and management oversight, social networking can prove valuable to both companies and professionals. There is a happy medium!!

10 What should your company do? Duty to supervise under NASD Rule Clear, written policies and procedures regarding electronic communications. Limit the number of employees or representatives authorized to speak. Provide training on and easy access to your policies.

11 Where is the Life Industry Today? Not early adopters Institutional barriers External efforts focus on brand awareness and public education Internal efforts focus on collaboration of information

12 Preserving and Retaining Electronic Communications Using electronic storage requires: Notifying the relevant authorities Preserving the records in a non-rewritable, easily accessible, and organized format Index and backup your records!

13 Evolving Practices of Records Management and Controls Security Review Boards E-communications Search Specialist Electronic Records Steering Committee Applications questionnaires

14 Can I do this better myself? Because of management and document retention issues, some companies have decided to host their own communities. Makes it easier to comply with NAIC, FINRA, and SEC rules, but brings up a myriad of other issues.

15 Managing Users Liability for the Statements of Others Protecting IP yours and others Privacy / Consumer Protection / Advertising Possible Problems

16 Managing Users: UGC User Generated Content (UGC) can cover: Blogs Forums Video Photographs Audio Software Code UGC can encompass any content which users upload or post online. Facebook applications, LinkedIn profiles, and YouTube videos are all UCG.

17 Managing Users: Copyright What is copyrightable on a social networking site? Images, art, movies -- anything fixed in a tangible medium Who owns the copyright? The author? The user? The website operator? Owner has exclusive rights to do and authorize any of the following: Reproduce the copyrighted work Prepare derivative works based on the copyrighted works Distribute copies of the copyrighted work Perform the copyrighted work publicly Display the copyrighted work publicly Direct copyright infringement could lead to criminal sanctions and civil liability.

18 Managing Users: Defamation Communications Decency Act provides immunity for publishers of third party statements made online. There is a spectrum of exposure to defamation claims running from solely hosting others websites as an ISP or website owner to authoring the content in question. In the middle is the exercise of some editorial control over third party content: So far, courts have extended CDA immunity in cases where defendants have possessed and exercised significant editorial control. But it is possible that a court in the future will view a significant degree of editorial conduct as rising to the level of authorship.

19 Privacy: Do s and Don ts Do protect against unexpected user personal revelations Do work closely with product teams and other internal groups -- plan for the future Do not over-promise re: security, safety, encryption, e.g., that you meet industry standards or the highest standards Do not over-promise about sharing information with third parties (e.g., we will never share your information with third parties) Do note potential information sharing in merger, acquisition or bankruptcy

20 For More Information Jennifer Carroll Archie Latham & Watkins LLP 555 Eleventh St., NW, Suite 1000 Washington, DC TEL: (202)