Wedbush encourages employees to use Twitter, Facebook, and LinkedIn.

Investment firms are encouraging the use of social media, but are taking steps to control its use, even as regulators are still trying to get their arms around it.

Wedbush Securities has launched a social media initiative offering employees a way to engage in social media conversations on platforms including Twitter, LinkedIn, and Facebook.

Wedbush embraces social media, recognizing it as an increasingly critical component to every financial firm’s marketing plan and overall growth strategy.

“Through proper training and resources, we felt confident in our decision to allow our team to be ‘social’ and engage in organic communication,” Natalie Taylor, vice president of marketing at Wedbush, told Markets Media.

“After all, our business is built on relationships,” Taylor said. “Through social media, our company has the ability to establish client connections, cultivate referrals and locate prospective opportunities.”

The firm is encouraging its staff to join the on-going dialogue and not to rely solely on “canned” statements, which will still be provided to supplement conversations with corporate information and activities.

Wedbush has hired Socialware, a provider of social media compliance software and services for the financial services industry. Socialware will allow Wedbush to properly review and archive social networking communications.

“We wanted a company that could provide the proper compliance technology, stay on pace with social network changes, and support our team with additional resources to accelerate their presence and reach while keeping us updated on regulatory developments,” said Taylor.

With so much on their plates, regulators have not had time to update existing policies on record retention and archiving. In fact, many of the applicable laws have been on the books for at least a decade.

With the potential risks that social media poses for producing unintended violations of securities laws, the industry and regulators are playing a form of hurry-up offense.

The starting point is Finra’s guidance on the use of social media, issued in 2010 and consisting of Regulatory Notices 10-06 and 11-39.

Finra issued 10-06 in Jan. 2010 to provide guidance to broker-dealers regarding the use of social media for advertising.

A task force was convened early in 2011 to revisit 10-06, resulting in the issuance of Regulatory Notice 11-39 as a corollary to 10-06.

“I believe regulators have provided a foundation for firm’s like Wedbush to begin using social media for business purposes, but as the industry further adopts this newer communication channel, and as social networking continues to develop and change, there is no clear way to predict an increase or ease in the rules down the road,” Taylor said. “This is why having a strong company social media policy, providing the proper training, and having a multitude of resources is important.”