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Financial group backs social media privacy bill
TIFFANY L. PARKS
Special to the Legal News
Published: June 3, 2014
The Financial Services Institute has backed a bill that would prohibit employers and educational institutions from requiring an employee, applicant, student or prospective student to provide access to any personal Internet account of the employee, applicant, student or prospective student.
The proposed legislation, House Bill 424, is jointly sponsored by Reps. Heather Bishoff, D-Blacklick, and Robert Hackett, R-London.
If enacted, the bill would ban an employer or educational institution from taking adverse action against individuals for failing or refusing to grant access to, allow observation of, or provide access information to an individual’s personal Internet-based account.
David Bellaire, FSI executive vice president and general counsel, recently submitted proponent testimony for the bill to the House Commerce, Labor and Technology committee.
“Specifically, FSI would like to commend you for the inclusion of Section 4113.38(6), which allows our members to continue meeting their compliance duties under federal securities law,” he said.
As an exception to the bill’s employer prohibitions, employers would not be banned from complying with a duty that is established under state or federal law or by a self-regulatory organization as defined under the federal Securities Exchange Act of 1934 to screen an employee or an applicant prior to hiring or to monitor or retain employee communications.
“On behalf of FSI’s membership in Ohio, which includes over 1,600 financial advisors, thank you for taking steps to ensure that our independent broker-dealers and financial advisors can continue to help Ohio’s hard-working citizens plan for the future while meeting the highest ethical standards,” Bellaire said, adding that under the federal securities law, broker-dealers must be a member of a registered securities association and self-regulatory organization.
“Currently, the Financial Industry Regulatory Authority is the only option for broker-dealer firms. To become members of FINRA, broker-dealers must agree to follow FINRA rules or risk being fined, suspended or barred from membership. FINRA rules are reviewed and approved by the Securities & Exchange Commission and courts have found that they preempt state law.”
Bellaire said FINRA Rule 2210 governs the communications that associated persons of a broker-dealer engage in with their customers and provides guidelines regarding content as well as the types of communications that may be made by registered individuals.
“Fortunately, HB 424 allows FSI members to remain in compliance with both state and federal laws if associated persons at broker-dealer firms are engaging in communications with customers through social media accounts,” he said.
“Furthermore, this inclusion addresses the conflict between the bill and FINRA rules. This exception will not change the character and effect of the legislation but will provide certainty to independent broker-dealers and their associated advisors in Ohio.”
Describing HB 424 as the social media privacy bill, Bishoff has pushed for lawmakers to move the measure to the governor’s desk.
“With technology changing every aspect of our lives, the legislature needs to realize that some of our current laws do not provide some of the protection that we are intended to have. If someone is looking for a job or an education they should under Ohio law be comfortable that their personal life will stay private,” she said.
“This bill is not aimed at hurting businesses from properly vetting potential employees. What it does is establish what is within their right to research their employee and what is considered private with regard to social media.”
HB 424 has not been scheduled for additional hearings.