Yesterday the SEC issued guidance permitting public companies to use social media platforms as a means for broadly communicating material corporate information. This supplements its 2008 guidance which approved the use of corporate websites as an acceptable channel for communication of material company news under Regulation FD.
At Casteel Schoenborn, we view the updated guidance as a positive development which requires simple steps to compliance. To comply, a company must simply post the chosen social media outlets and usernames, along with the types of information the company expects to post there, to the company’s website. It is further advisable to post this information in press releases, filings and other investor materials, along with streaming live feeds of any social media posts to the company’s website.
The initial challenge facing companies that choose to utilize social media will be in determining (a) appropriate channels (e.g. Facebook and Twitter), (b) who from the company will be authorized to “post” material disclosures, and (c) required changes to disclosure committee procedures. Companies that currently use social media for marketing and customer interaction purposes will now need to manage the added complexity and oversight of postings that include material information to ensure that more restrictive Reg FD disclosure parameters are followed.
We also recommend against the use of personal social media sites for public dissemination of material company information. While in unique situations and industries certain corporate officers may have significant personal social media “followers”, limiting approved posts to corporate accounts and usernames maintains the integrity of corporate branding and messaging.
We’re recommending that our clients consult with both legal and IR counsel before adopting new social media disclosure practices at their companies.
The SEC’s April 2 guidance can be found here: http://www.sec.gov/news/press/2013/2013-51.htm.
Additional media coverage of this development can be found here: http://www.bloomberg.com/news/2013-04-02/sec-approves-social-media-use-for-companies-material-disclosure.html.