Morgan Stanley blocks Twitter

This is how Wall Street firms are tiptoeing into the fast-paced world of social media. Firms like Morgan Stanley must tightly monitor communications to ensure that they are in compliance with securities regulations. As a result,they generally block employees from using social media sites like Twitter or even checking personal e-mail accounts at work. Indeed,the banks underwriting the gigantic Facebook IPO bar their employees from using the social networking site.

Yet for Wall Street,social media constitute a largely untapped marketing opportunity.

So a cottage industry has emerged. Adept start-ups act as guides on Wall Street’s social media adventure,providing the software that helps firms comply with regulations that date to a sleepier era of communication.

“Here they were,these organisations that had never used the social networks because they had completely locked down access,” said Chad Bockius,the chief executive of Socialware,a start-up based in Austin that advises financial firms on social media. “This is the same thing we saw when people started to use the internet for business purposes.”

Bockius,35,says his company was the first to offer social media compliance products for the financial industry. Socialware sells software that can archive messages,house a library of prewritten content and allow compliance officers to oversee postings.

Guardian Life,the insurance company,has used Socialware’s software to give its sales force access to LinkedIn and Facebook. AllianceBernstein,the asset manager,relies on Socialware for its group of advisers on LinkedIn.

Morgan Stanley Smith Barney,which Bockius holds up as one of his most enterprising clients,gave about 600 of its 17,800 financial advisers access to Twitter and LinkedIn last summer,and now plans to expand those ranks.

“We’re trailblazing,so to speak,” said Lauren W Boyman,who runs social media at Morgan Stanley Smith Barney.

But even as firms preach the benefits of a social media presence,the reception online has tended toward the mocking.

“You’re not going to build up a real following in social media if your tweet is,‘It’s a beautiful day at Morgan Stanley’,” said Joshua M Brown,a financial adviser at Fusion Analytics Investment Partners,who runs the Reformed Broker,a popular blog.

Boyman said internal statistics showed that financial advisers were successfully engaging with clients over Twitter,adding that prewritten messages help streamline the process.

The costs of a mistake are high. Thomas A Pappas,vice-president for advertising regulation at the Financial Industry Regulatory Authority,Wall Street’s self-regulator,says it is no easy task overseeing communication on sites that were intended to issue messages at a rapid-fire pace.

“It’s scary for compliance officers and firms,” Pappas said. Last year,the regulator suspended a California-based broker,Jenny Quyen Ta,claiming that she had praised certain stocks on Twitter without telling her firm she was doing so,or revealing that she personally held stakes in some of those investments.