Wall Street vs. Its Employees' Privacy

State efforts to block companies from monitoring employees' personal Facebook and Twitter accounts are under fire from a new front -- securities regulators.

An unlikely alliance of regulators and industry groups is seeking to carve out exemptions in state laws that would allow certain financial firms to sidestep bans on looking at the personal social-media accounts of employees. Wall Street's self-regulator, the Financial Industry Regulatory Authority, says financial firms need a way to follow up on "red flags" suggesting misuse of a personal account, according to a spokesman. Finra has asked lawmakers in about 10 states to make changes to proposed legislation, the spokesman said. Securities regulators worry that the raft of new laws aimed at protecting employees' privacy puts investors at risk. They say the fast spread of financial advice on social networks such as Facebook and Twitter could create new channels for Ponzi schemes and other frauds, and that fighting those frauds will be harder if state lawmakers snarl efforts by companies to monitor what employees are pitching to investors.