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The results of a study released by Montieth & Co. in January indicated that as employees have become more connected through social networking, insider trading has become more “socialized.” According to the study, given their age (more than half of the 76 people charged with insider trading since August 2009 were between the ages of 31 and 40), these individuals “grew up in their professional lives with social networking as a model for interacting with others, for creating bonds and exchanging information.”
While insider trading is a clearly illegal activity, there are many other corporate risks that can emerge due to social media activity but are not quite as obvious, including libel, loss of intellectual property, or harassment. The question becomes: What is the proper balance between defending employee rights and protecting the company’s reputation when creating a social media policy? Many companies have struggled to find this balance, especially as employee access to these platforms becomes almost constant during the workday.
With social media risks and the need for corporate policies growing, how can businesses tackle this issue?