7 Ways To Stay Compliant On Seeking Alpha

by: Michelle M. Waymire


As a social media site, Seeking Alpha comes with a unique set of compliance considerations for financial advisor contributors.

Crafting a separate SA compliance policy is a critical part of staying compliant.

Other important considerations include maintaining research objectivity, adding extra disclaimers, and controlling use of comments.

Let me start by saying that I am not a financial advisor, nor am I a lawyer. However, my work in marketing for financial services requires knowledge of advisors' typical compliance constraints, especially with regards to social media. This particular post is in response to a request I received for some guidance about how to stay compliant when contributing to Seeking Alpha, which due to its participatory nature undoubtedly constitutes a type of social media.

Well, friend, ask and ye shall receive. I've spent the last couple of weeks trolling through the features of the site, with the goal of better illuminating compliance best practices when contributing to Seeking Alpha. Here's what I've found:

1. Create usage guidelines.

This is the most basic best practice, but also one of the most important, recommended by the SEC's Risk Alert on Social Media. If you haven't read it, I highly recommend you do, because it contains a lot of great information on what to include in your usage guidelines. More importantly, it clearly states that every social media channel needs its own complete set of guidelines, to clearly delineate between the content standards, monitoring and approval policy, and functionality of all your various channels.

In addition to the SEC's guidance on social media usage, financial advisors may be subject to FINRA guidelines and state policies, which can vary widely. I highly suggest that you ask your Chief Compliance Officer or compliance consultant whether you're permitted to post on SA as a contributor, then work together to craft a policy that meets your needs.

2. Put your clients first.

If you're a fiduciary advisor, this best practice is ingrained in your culture. However, social media usage presents some unique opportunities to breach that fiduciary duty in ways you might not have considered. Consider for example, the goal of your research, which is primarily to benefit your clients and your employer. This means a change in recommendation or the discovery of a new investment opportunity should be first shared with your employer and relevant clients, then posted online. In addition, if you are writing specifically about a strategy that you manage, never reveal customer information or client-specific performance data that may be subject to any type of nondisclosure agreement. You may also want to disclose to your compliance officer any payment that arises from premium article contributions.

3. Maintain your research objectivity.

It's a commonly held social media best practice to avoid concrete discussion of your investment decisions, rather sticking to general statements about the markets or non-investment content. However, that's not easy to fulfill on a site largely geared towards, well, seeking alpha. In that case, we can modify the "avoid investment discussions" best practice to instead read, "stick to objective investment discussions."

What I mean by that is two things: First, SA is primarily for advisors to share information about the markets, stocks, investment research. It is not meant to help you to attract other users to your firm for service. As such, avoid posting about your own skills and services - stick to sharing your research. A good way to adhere to this rule is by pre-approving your content, to make sure that your discussion of the markets doesn't creep into the territory of advertising your services.

Second, and this is something that SA espouses itself: "Please include a 'variant view'. It makes you look more balanced (and smarter!)." In other words, stay objective. Considering all sides of an issue, helps eliminate the argument that your work is a one-sided attempt to draw traffic towards the recommendations that benefit you the most.

4. Take advantage of the built in disclaimers - and add your own.

When you contribute an article to SA, there are a handful of built-in disclaimers for positions and business relationships. That way, readers understand when bias may be present in your research. But in my opinion, the best feature of SA is the ability to add your own disclosures. This is particularly useful in ensuring that your post does not constitute a solicitation of services, and that the accuracy of information in the post cannot be guaranteed. Some common disclaimers you might want to consider:

  • Past performance is not an indicator of future performance.
  • This post is illustrative and educational and is not a specific offer of products or services.
  • Information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned herein.
  • Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed.
  • All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change.

5. Consider the picture you choose.

In my work with marketing publicly traded mutual funds, we once created an overview video that walked the viewer through a series of use cases for the fund. It took a long time to create and produce, and yet our compliance department hated it - all because of a 1-second clip of stock footage that showed a picture of Treasury bonds. It turned out, any picture of money in any form was deemed "promissory." As in, "invest in this fund, and that stack of Treasury bonds can be yours!" Of course, that wasn't our intent in including the video clip, but it made me appreciate the suggestive nature of some financial images.

The constraints for financial advisors are far more relaxed than publicly traded mutual funds, and Seeking Alpha contains a more educated readership. However, you should still strongly consider what image you choose for your post, and what it conveys to the reader. Chances are, your compliance officer would love it if you stay away from images that mislead or misconstrue your ability to actually find alpha with your recommendations.

6. Mind the comments.

In most social media channels, advisors should limit use of comments. In fact, comments should be turned off whenever possible. SA does not allow this feature, but you may want to restrict their use in your time spent on the site. Don't comment on others' articles, and in general, you should not respond to or alter comments you receive on your work, whether positive or negative.

The extra disclaimer spot discussed above is also a great way to articulate your policy on comments. In fact, the user who suggested this article made a great comment on one of my previous posts: "I have a disclosure on my articles stating that any positive comments should not be construed as an endorsement of my abilities to act as an investment adviser. Negative comments are not restricted either..." Adding this kind of language to your post is a great way to make sure that you're not accidentally breaking SEC policies on comment use.

7. Maintain complete post records for five years.

The SEC's Risk Alert on Social Media recommends a recordkeeping period of five years for social media interactions such as SA contributions. However, what to recordkeep is not clearly defined. There's no right answer here, but more is better. Rather than simply keeping a record of the text of the post itself, make sure to build a comprehensive record for each post. This should contain the text of the post, a copy of the marketing image you choose, any files or research to substantiate your claims, and a screen shot of the post on the actual Seeking Alpha website.

This list here is by no means exhaustive, but hopefully it gives you a starting point of things to consider when contributing to Seeking Alpha. As I am not a financial advisor, feel free to comment below with other best practices you've found as a contributor! I would certainly love to hear them.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.