Social Media Disclosure Update: Where Should Companies Begin?

Posted by on April 10th, 2013

An article in this week’s Wall Street Journal reported that companies are being extremely cautious when approaching social media after last week’s SEC statement allowing for them to use social media in public company communications.  One of the primary reasons for this is that social media is such a behemoth of a concept that it can be hard for companies to know where to begin.

Here are some thoughts to help companies embrace social media as a means to communicate.  First, it is important to note that at the end of the day, it’s all about compliance with Regulation Fair Disclosure (Reg FD).  Notwithstanding whether companies embrace social media or not, they still need to disclose material news so everyone is put on notice of the news at the same time.

Assuming companies are comfortable with Reg FD and what it stands for and are ready to hop on the social media bandwagon, below are five tips to consider when getting started:

  1. Establish a policy that guides the company and its employees on who can and cannot communicate on behalf of the company, the tone / messaging of social media usage as well as the timing of social media engagement;
  2. Conduct a social media audit to identify which channels can best reach a company’s investor base;
  3. Once the channels are determined, create IR-specific handles and pages to disseminate material news;
  4. Specify these disclosure channels in an upcoming Form 10-K (or amend an existing Form 10-K) to indicate that these social media channels and other disclosure methods (e.g. traditional newswire services, filing of Form 8-Ks, posting to corporate website, etc.) will be used going forward in a company’s communications; and
  5. Begin to disseminate all material news as specified in the Form 10-K, and continue to adhere to this process until a company decides to change its dissemination procedures it in a subsequent Form 10-K.

To reiterate, social media is a means to an end – the end being fair and equal disclosure of material information so that all investors are on the same playing field.