Firms on Wall Street are starting to monitor and limit the use of Twitter to make sure that they are not breaking any securities regulations by hyping up a stock, for example. To do this, most firms just end up blocking the site and others like it. Some firms will not even let you check personal email at work just in the fear that some information could be leaked which could get the firm in trouble.

The news is not surprising to us. ValueWalk has spoken with quite a few different hedge funds in recent weeks and they have confirmed that Twitter is not only blocked at their firm but at most other firms that they have heard from.

Morgan Stanley (NYSE:MS), the main underwriter for the much anticipated Facebook IPO has been on the prowl for any employees leaking sensitive information over social media sites such as Twitter. The firm as blocked all of those sites including Twitter and other security measures are in place.

So far, Wall Street has not fully harnessed the capabilities of social media for other uses such as marketing for example. However, until there is a way to still manage what is being written and leaked, Wall Street may continue to avoid getting cozy with sites such as Twitter.

However, there may be a tide of change coming for social media and Wall Street. Chad Bockius is the CEO of Socialware, a start up firm that advises financial firms on social media posts and protection. Socialware is software that has libraries of prewritten posts that allow supervisors to see what you are posting, to make sure it complies with regulation. So far the software has been gaining traction at firms such as Guardian Life and even Morgan Stanley.

Research has shown that financial advisers are more successful if they can connect with clients and potential clients on social media sites as described. The prewritten messages just make the process faster and safer for the firm.

The SEC is watching and waiting to charge an individual or fine a firm for suspicious posts and activity on social media sites. Countless people have already been accused of fictitious stock recommendations because they failed to not only follow protocol but they did not even mention if they have ownership in the stock they were recommending.

These days, since 2008, government has been watching increasingly for signs of insider trading, securities fraud, hyping up stocks, etc on social media sites such as Twitter and Linkedin Corporation (LNKD). They will continue to watch over Wall Street but luckily there are ways for Wall Street to reap the benefits of using these sites without getting in trouble with the SEC.