In recent days (April 2 to be exact), the U.S. Securities and Exchange Commission (“S.E.C.“) issued a report that said that Regulation FD could be satisfied by issuers by posting disclosure to social media sites. To us, this is a logical extension of the J.O.B.S. Act since its intention was to allow small companies to capitalize themselves through the larger reach of the Internet. The S.E.C. release, available at http://www.sec.gov/news/press/2013/2013-51.htm, provides more insight.
Regulation FD is very important for publicly traded companies – it basically states that all investors should receive good and proper information disclosure from publicly traded companies at the same time. Only certain venues were considered proper outlets to post “Press Releases” and even information on the company’s website was limited and specified. Nothing worse than getting a comment from the S.E.C. on a registration statement relating to improper disclosure on the company’s own website – news sections posting information news before the official press release or 8K, company newsletters that disclose something improperly, etc. Here is the S.E.C.’s definition of Regulation FD (http://www.sec.gov/answers/regfd.htm).
Here are some simple rules that we train our client organizations to follow:
- Create an “Investors” section of their website. Link to other public venues for quotes, etc. such as Yahoo! Finance, Google Finance, Market Watch, OTC Markets.
- List board members, including committees.
- List transfer agent.
- List company’s SEC counsel.
- List company’s Ethics Statement.
- Create a “News” section of website wherein only items that have been released officially through a Regulation FD authorized distributor, such as Market Wire, Mac Report, Business Wire, etc..
- Create a “BLOG” section of website for opinions.
- Always release information as follows:
Disclosure is a “by the numbers” issue, meaning every company should come
up with a standard operating procedure (“SOP”) and follow it religiously – more to ensure that news gets the largest reach but also to ensure that a company doesn’t go afoul of the authorities.
- The Green Light to Social Media Use for Regulation FD Purposes Looks More Like Yellow (securitiesnewswatch.com)
- The Board, Social Media and Regulation FD (blogs.law.harvard.edu)
- Social media to be allowed for SEC fair disclosure (bizjournals.com)
- Twitter, Facebook OK to use for news – SEC (buzz.money.cnn.com)
- Regulation FD in the Age of Facebook and Twitter (blogs.law.harvard.edu)
- Did The SEC Just Issue Double Secret Guidance For Using Social Media? (somelaw.wordpress.com)
- Corporate disclosure via social media (professorbainbridge.com)