Retweets, Social Media & Being Public – Going Public Lawyers
Posted by Brenda Hamilton, Securities and Going Public Lawyer
It has become almost routine for public companies to use social media to interact with their shareholders, and customers. The Securities and Exchange Commission (the “SEC”) has provided guidance in compliance and disclosure interpretations addressing the use of Twitter, Facebook, and other forms of social media. It is important that public companies and companies engaged in going public transactions familiarize themselves with the SEC’s rules concerning social media.
Active Hyperlinks & Disclosure Obligations
The SEC has stated that the use of social media and hyperlinks using social media platforms, such as Twitter, that limit the number of characters or amount of text that can be included in the communication, effectively making it impossible for firms to include the required legends and other disclosures.
Under these circumstances, the SEC states that the firm can use an active hyperlink in the communication to satisfy the requirements of Rule 134(b) or Rule 134(d). The SEC cautions firms that where it is possible to include the required disclosures, along with the other information, without exceeding the applicable limit on number of characters or amount of text, the use of a hyperlink to the required statements will not suffice.
A hyperlink can be used in social media communications under the following limited circumstances:
• The communication must be distributed through a social media platform that has technological limitations on the number of characters or amount of text that may be included in the communication;
• The electronic communication would exceed the limit on the number of characters or amount of text if it included the required statements in their entirety; and
• The communication must contain an active hyperlink to the required statements and prominently state, through introductory language or otherwise, that important or required disclosures are provided through the hyperlink.
Re-Tweets of Social Media Communications
The SEC also has addressed social media communications that are subsequently re-tweeted, “shared”, or published by third parties without the required disclosures and/or legend. The SEC has clarified that if the third party is neither an offering participant, nor acting on behalf of the issuer or an offering participant and the issuer has no involvement in the third party’s re-transmission beyond having initially prepared and distributed the communication in compliance with either Rule 134 or Rule 433, the re-transmission would not be attributable to the issuer.
Complying with the SEC’s electronic communication rules while promoting your company’s product or service through social media or marketing online, can be time consuming and difficult. To ensure compliance, firms and issuers should develop social media policies and procedures and have a qualified securities attorney review the policies and procedures along with all electronic communications prior to dissemination.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855