Social Listening is the Next Frontier - Monitoring

1. To Monitor or Not to To Monitor or Not to Monitor… Monitor… - Social Media Monitoring - Let’s dig into why MML was fined: both penalties were incurred for failing to monitor for non-compliant activities. incurred for failing to monitor for non-compliant activities. incurred for failing to monitor for non-compliant activities. incurred for failing to monitor for non-compliant activities. incurred for failing to monitor for non-compliant activities. incurred for failing to monitor for non-compliant activities. Let’s dig into why MML was fined: both penalties were Let’s dig into why MML was fined: both penalties were Let’s dig into why MML was fined: both penalties were Let’s dig into why MML was fined: both penalties were Let’s dig into why MML was fined: both penalties were In the first instance, the firm admitted benefiting from In the first instance, the firm admitted benefiting from recommendations for select mutual fund share classes recommendations for select mutual fund share classes made by their contracted clearing broker. According to the made by their contracted clearing broker. According to the SEC and the SEC and the $2.1 million settlement $2.1 million settlement, the affiliated broker never disclosed conflicts of interest to their clients. never disclosed conflicts of interest to their clients. 01 , the affiliated broker The transgressions were episodic from October 2015 The transgressions were episodic from October 2015 through to 2019. This is a classic example of the “fox through to 2019. This is a classic example of the “fox watching the hen house” where MassMutual, and MML, watching the hen house” where MassMutual, and MML, were supposedly monitoring the clearing broker’s were supposedly monitoring the clearing broker’s activities – only they weren’t doing so. And that lack of activities – only they weren’t doing so. And that lack of monitoring cost MML two million dollars. monitoring cost MML two million dollars. 02

2. The third instance is far more interesting and has the explosive potential to trigger dramatic changes in explosive potential to trigger dramatic changes in explosive potential to trigger dramatic changes in explosive potential to trigger dramatic changes in explosive potential to trigger dramatic changes in The third instance is far more interesting and has the The third instance is far more interesting and has the The third instance is far more interesting and has the The third instance is far more interesting and has the The third instance is far more interesting and has the explosive potential to trigger dramatic changes in monitoring. monitoring. monitoring. monitoring. monitoring. monitoring. Is it incumbent upon the financial firm to Is it incumbent upon the financial firm to rigorously monitor all its employees’ rigorously monitor all its employees’ social media and public commentary? social media and public commentary? Apparently so given the nearly five million Apparently so given the nearly five million dollars fine levied on MML. The fine has dollars fine levied on MML. The fine has spurred extensive changes to the social spurred extensive changes to the social media policies of the subsidiary’s parent, media policies of the subsidiary’s parent, MassMutual. No doubt other firms are MassMutual. No doubt other firms are grappling with the same need to do so. grappling with the same need to do so. “social listening” and it’s a phrase you’re going to hear often, even if you’re external to the RegTech industry often, even if you’re external to the RegTech industry often, even if you’re external to the RegTech industry often, even if you’re external to the RegTech industry “social listening” and it’s a phrase you’re going to hear “social listening” and it’s a phrase you’re going to hear “social listening” and it’s a phrase you’re going to hear There were two compliance monitoring There were two compliance monitoring failures in the Roaring Kitty saga. One, failures in the Roaring Kitty saga. One, high trades are supposed to get flagged. high trades are supposed to get flagged. Once flagged, compliance officers are Once flagged, compliance officers are tasked with investigating the trade tasked with investigating the trade thoroughly to assess if any financial thoroughly to assess if any financial crime was commitAgain, MML failed crime was commitAgain, MML failed here with its inadequate monitoring here with its inadequate monitoring efforts for social media. efforts for social media.

3. Listening goes beyond tracking Listening goes beyond tracking and interpreting statements made and interpreting statements made by your audience about your brand; by your audience about your brand; it needs to be comprehensive it needs to be comprehensive enough in scope to detect activities enough in scope to detect activities relevant to your company. In the relevant to your company. In the case of Roaring Kitty, high trade case of Roaring Kitty, high trade volumes and pumping up the value volumes and pumping up the value of a stock should be flagged by all of a stock should be flagged by all financial firms – regardless of financial firms – regardless of which one employs the person which one employs the person making the posts. making the posts. Many firms aren’t closing the loop on monitoring their employees’ personal social media feeds. One reason is the sheer volume of content to sift through; this can be an insurmountable challenge for smaller firms that lack the RegTech resources required for such a task. the RegTech resources required for such a task. the RegTech resources required for such a task. the RegTech resources required for such a task. the RegTech resources required for such a task. Many firms aren’t closing the loop on monitoring their employees’ personal social media feeds. One reason is the sheer volume of content to sift through; this can be an insurmountable challenge for smaller firms that lack an insurmountable challenge for smaller firms that lack an insurmountable challenge for smaller firms that lack an insurmountable challenge for smaller firms that lack Many firms aren’t closing the loop on monitoring their employees’ personal social media feeds. One reason is the sheer volume of content to sift through; this can be the sheer volume of content to sift through; this can be the sheer volume of content to sift through; this can be Many firms aren’t closing the loop on monitoring their employees’ personal social media feeds. One reason is employees’ personal social media feeds. One reason is Many firms aren’t closing the loop on monitoring their Another reason is the obfuscation of bad behavior masked by emojis. The bottom line? The bottom line? Monitoring is the essence Monitoring is the essence of compliance. If you don’t of compliance. If you don’t do it, you’ll have to pay the do it, you’ll have to pay the price. price. https://www.shieldfc.com/