Social networking sites like Facebook and LinkedIn raise ‘serious new challenges’ for financial regulators, the head of the largest US independent securities regulator said on Tuesday. Wall Street bankers and analysts increasingly want to use social networking to connect and interact with customers, Richard Ketchum, the chief executive of the Financial Industry Regulatory Authority said.

But as these sites are currently designed they may not allow firms to keep the kind of archives of their employees’ business communications required by regulators, Ketchum told industry group Securities Industry and Financial Markets Assocation’s annual meeting. ‘We continue to witness the advent of technologies that will challenge your ability to ensure compliance with regulatory requirements,’ Ketchum told the bankers and dealers. ‘Social networking is one such innovation.’

-New Age