Balancing Social Media Benefits with Regulatory Risk
A new white paper looks at the benefits of platforms like LinkedIn and Twitter and how investment firms can use them without running afoul of SEC rules.
One in three private equity firms uses social media to enhance its brand, according to global financial advisory firm Carolon Capital.
More than 92 percent of financial services professionals are starting to see benefits from marketing and branding tactics on social media, the firm wrote in a recent white paper. Yet uncertainty around regulation continues to hamper adoption.
Building brand awareness through a consistent presence is one of the most compelling reasons financial firms are turning to platforms like Twitter and LinkedIn. “Social selling,” combined with traditional deal sourcing, allows for more interactions with prospects and sharing thought leadership content can attract more inbound enquires, Carolon said.
Despite the benefits of using social media, investors are wary of running afoul of SEC and FINRA social media rules, which remain unclear.
“In today’s world, trying to apply decades-old rules to current practice has produced an opaque regulatory landscape for firms to navigate,” Carolon said.
The white paper includes five steps to ensure private equity funds and other alternative investment firms remain compliant when using social media—from setting policies and procedures for employees, to walking the line between advertising and LinkedIn endorsements.
A past MMG feature looked at social media’s implications for due diligence. Read it here.
Hollie Merrick is a frequent contributor to Middle Market Growth.
