--- title: SEC Relaxes Rule on Social Media description: The Securities and Exchange Commission has issued guidance intended to assist firms in applying rule 206(4)-1(a)(1), known as the “testimonial rule.” image: https://articles.marketsmedia.com/hubfs/Imported_Blog_Media/sec-relaxes-rule-social-media-950-1.jpg --- ![websites-group](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/new-MMG-01.svg) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-new-marketsmedia-logo.svg)](https://www.marketsmedia.com/) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-menu-traders-redlogo.svg)](https://www.tradersmagazine.com/) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-menu-bestexe-logo.svg)](https://www.bestexecution.net/) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-menu-fidesk-logo.svg)](https://www.fixglobal.com/) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-fixglobal-new-logo.svg)](https://www.fixglobal.com/) - [*Facebook*](https://www.facebook.com/MarketsMedia/) - [*Twitter*](https://twitter.com/marketsmedia) - [*Linkedin*](https://www.linkedin.com/company/markets-media-llc) - [Newsletter](https://articles.marketsmedia.com/sec-relaxes-rule-social-media#popup-newsletter) #### Want the latest news on securities markets -- FREE? 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The use of social media has increased the demand by consumers for independent, third-party commentary or review of any manner of service providers, including investment advisers. Social media has facilitated consumers’ ability to research and conduct their own due diligence on current or prospective service providers. “It's an example of the SEC understanding the realities of how these technologies work and how difficult it is for an RIA to prevent third party posts and the like,” said Stephen Pope, founding member of Red Oak Compliance Solutions, which provides compliance services for RIAs. “It’s been very difficult to implement the rule as it was written. This is a good move on the SEC's part because it shows that they've got an understanding and empathy for what their constituents are going through.” In certain circumstances, an investment adviser’s publication of all of the testimonials about the investment adviser from an independent social media site on the investment adviser’s own social media site or website would not implicate the concern underlying the testimonial rule, the SEC said. The key word is “all.” “If you don’t pick and choose and publish everything, it is acceptable,” Steve Quinlivan, partner at law firm said Stinson Leonard Street LLP, said in an online posting. “The staff isn’t really opening the flood gates here, but I suppose it is a step in the right direction.” The testimonial rule was designed to address the nature of testimonials when used in investment advisory requirements. Depending on the facts and circumstances, public commentary made directly by a client about his or her owned experience with, or endorsement of, an investment adviser may be a testimonial. For example, if an RIA invited clients to post public commentary directly on the RIA’s own site, blog or social media site that served as an advertisement for the RIA, such testimonial would not be permissible. If, however, the same public commentary came from an independent social media site, it would be permissible. Similarly, publication of testimonials from an independent social media site that emphasizes commentary favorable to the RIA or de-emphasizes commentary unfavorable to the RIA is prohibited. The RIA may publish “only the totality of the testimonials from an independent social media site,” the SEC guidance said. Pope recommends that RIAs set up Google alert and periodically spot check to see how their employees are using all social media and make sure it conforms to their policy. “With social media, Twitter, Facebook and LinkedIn are often mentioned, but there are so many other ones out there that aren't being captured,” Pope said. “It really is up to the compliance team to set up Google alerts, train advisers and discipline anybody that's not following policies.” Feature image via [DPC](https://articles.marketsmedia.com/www.dollarphotoclub.com/53282726) [Share](https://www.facebook.com/share.php?u=https://articles.marketsmedia.com/sec-relaxes-rule-social-media) [Tweet](https://twitter.com/intent/tweet?text=US+ETFs+Have+Record+Net+Inflows&url=https://articles.marketsmedia.com/sec-relaxes-rule-social-media) [Share](https://www.linkedin.com/cws/share?url=https://articles.marketsmedia.com/sec-relaxes-rule-social-media) ![email](https://articles.marketsmedia.com/hubfs/Markets%20Media/email.svg) ### NEWSLETTER SIGN UP And receive exclusive articles on securities markets ### Related articles 1. 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