As we have discussed in prior posts, the U.S. Securities and Exchange Commission (SEC) has been considering how the use of the social media by public companies fits within the existing regulatory framework. The SEC recently issued additional guidance regarding the use of social media by public companies. In its guidance, appearing as C&DIs 110.02 and 232.16, the SEC clarified that when third parties re-tweet or otherwise re-transmit a social media post originated by a public company, the company is not responsible for ensuring that the re-transmission complies with securities laws. Under the SEC’s guidance, a re-tweet or re-transmission is not attributed to the company provided that:
- the company has no involvement with the third party’s re-transmission of the post;
- the third party is not acting on behalf of the company; and
- the third party is not a participant in an offering of company securities.
We believe this new guidance provides another step toward permitting public companies to use social media to communicate with stockholders and the investment community. This trend toward social media as a preferred platform for communicating with stockholders and potential investors underlines the need for public companies to adopt a comprehensive social media policy.
For more information on this topic please contact Daniele Levy.