Last week, the SEC charged an Illinois man with attempting to sell $500 billion worth of fraudulent securities through LinkedIn. The man is also accused of falsely portraying himself as a registered investment adviser with the SEC as well as failing to maintain appropriate books and records. Fortunately nobody appears to have fallen for the scam even though there was reportedly interest from potential buyers. The result of this situation is a new SEC social media alert providing advisers with guidance related to social media usage.

This is the first time we’ve seen the SEC specifically address social media concerns, although for those familiar with the regulatory notices previously issued by FINRA, there is not much new here. The risk alert titled, Investment Adviser use of Social Media,  is perhaps the most interesting SEC social media alert. It provides high-level observations along with a list of factors for firms to consider such as social media usage guidelines, content standards, monitoring, training, and information security. The alert also strongly reiterates the need to comply with record-keeping requirements when communicating across social media channels.

The SEC social media alert highlights the growing impact of social media in the financial industry as well as the SEC’s increased focus on the issue. It is important to remember that the key message here is not that social media usage is a problem; rather, investment advisers should continue to follow rules and conduct themselves appropriately across all channels in which they engage in business. And, yes, social media channels have simply become too important to ignore.