• Reuters, Wednesday, October 28, 2009 3:28 PM

Social networks raise "serious new challenges" for financial regulators, according to the head of the largest U.S. independent securities regulator. Indeed, Wall Street bankers and analysts increasingly want to use such networks to connect and interact with customers, said Richard Ketchum, the chief executive of the Financial Industry Regulatory Authority said.

But, as sites like Facebook and LinkedIn are currently designed, they may not allow firms to keep the kind of archives of their employees' business communications required by regulators. For that reason, most firms presently prohibit their employees from using sites like Facebook for business, partly because of the difficulties they pose for firms' ability to meet supervision and record-keeping requirements. That, however, is getting tougher to enforce in an increasingly social world.

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