As explained by Putnam: "Certain words used in a social media context can trigger scrutiny by regulators. The terms...are a small subset of what regulators routinely look at when evaluating the appropriateness of social media communication. These terms are worth considering any time you are writing Tweets, LinkedIn updates, or Facebook posts." According to Putnam, advisors should always work with their compliance teams when engaging on a social network.
In other words, it all depends on context. "Avoiding a list of prohibited words wont help if youre doing something illegal, he says, and as long as youre not communicating inappropriate promises and commitments to prospects and clients theres nothing wrong with these words in a proper context.
"The point is, don't make promises and commitments that are illegal as opposed to figuring out how to do illegal things without using so-called prohibited words," he said.
"In my nearly 13,000 tweets, I've probably used 'mislead,' 'hypothetical,' and 'oversimplified' a few times, but they're not part of my normal vernacular," he said. "The SEC and FINRA are primarily looking for unsuitable product promotions. They don't want to spend a week pouring over an advisor's tweets, so they look for words they can easily scan through."
Winterberg warned advisors not to make false statements or pitch securities, noting that penalties for such actions could be as extreme as license suspension or revocation and would depend on the severity of the violation. Case in point:
"In my opinion, FINRA is taking appropriate steps. The message is: don't take advantage of consumers or rip them off." Winterberg said. "The good news is that the overwhelming majority of advisors using social media are following the rules."
Whether you agree or disagree, here is the full list of words Putnam Investments warns advisors to avoid. But, as Kitces said, "better to avoid committing fraud as opposed to avoiding the word 'fraud.'"
- Circumvent
- Inaccurate
- Oversimplified
- Conceal
- Incomplete
- Oversimplify
- Disqualified
- Loophole
- Rumor
- Disqualify
- Mark-up
- Secret
- Exaggerate
- Markup
- Unapproved
- Failed to
- Misappropriate
- Unethical
- False
- Misconduct
- Unverified
- Fraud
- Mislead
- Unwarranted
- Fraudulent
- Misled
- Violate
- Guarantee
- Misrepresent
- Violation
- Hypothetical
- Omitted
- Willful
- Improper
- Overcharge
- Willfully
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