Caveat Vendor

The Social Media Backlash Begins . . .

April 23, 2013

Behnam Dayanim

No, I’m not talking about the recriminations circling the mediasphere concerning the misinformation disseminated in the wake of the Boston Marathon attacks last week (although that might make for an interesting post).

Instead, I refer to an article that appeared in the Wall Street Journal yesterday reporting concerns voiced by the Financial Industry Regulatory Authority over recent state laws that prohibit employer monitoring of employees’ personal social media accounts.

Finra is a self-regulatory body for the securities industry, and it is worried because those state laws generally prohibit the types of monitoring that are intended to prevent violations of securities regulations.  Broker-dealers’ communications with clients are heavily regulated to prevent impropriety, and Finra fears that these state prohibitions will make it impossible to comply with federal requirements.  Whether those federal rules will trump state laws is uncertain.

Loyal readers will recall that we warned about these types of problems in an earlier blog post. (Yes, we scooped the Journal.) These laws, while well-intentioned, have been hastily drafted and enacted, without careful or complete consideration of all of their ramifications. According to the Journal, a securities industry trade association, the Securities Industry and Financial Markets Association, did voice its concerns with California’s law to Governor Jerry Brown at the time the law was being considered. But its concerns were rebuffed, and in any event the issue extends beyond California and beyond the securities industry.

Where precisely to draw the line between an employer’s need for surveillance or investigation and an employee’s legitimate zone of privacy is not an easy question to answer. As Finra’s objections make clear, all too often legislators have not seriously been asking themselves the question.

Caveat Vendor is Paul Hastings' Consumer Issues blog. We welcome your feedback. Please contact our blog editor with any thoughts or suggestions.

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