How to be liked in social media and in compliance with Regulation FD

Posted on 04-28-2015 by
Tags: social media , Latest Headlines & Stories , compliance

With the increasing use of social media by companies, it was only a matter of time before the Securities and Exchange Commission weighed in on its use. In 2013, the SEC gave approval of the use of social media to disseminate information in compliance with Regulation FD (the fair disclosure rule).

Today, social media is primarily used as a supplement to public companies’ earnings releases, earnings calls, investor conferences and more. For example, it's common to Tweet some of the main points from the published earnings release via Twitter®.

To help stay in compliance with Regulation FD when using social media, here are a few tips:

  1. Ensure investors’ access to the chosen social media platform is not restricted.
  2. Notify investors about which social media will be used to disseminate information.
  3. Be aware of timing. For example, do not Tweet select information from the earnings release before it’s publicly available.

Explore more information about Regulation FD, as well as find practical guidance, annotated forms and other efficiency tools for your Securities and Capital Markets practice.

Regulation FD

  • Social media and technology have expanded the way in which companies try to engage with customers, investors and other third parties. Public companies, and the attorneys advising them, need to be aware of how the U.S. Securities and Exchange Commission (SEC) views certain communications under Regulation FD. Regulation FD was enacted by the SEC to ensure that public companies were not disclosing material, nonpublic information to certain investors or analysts prior to disclosing such information to the public. Understanding which communications are covered by Regulation FD, and how to prevent or remedy violations, is imperative for any securities lawyer advising a public company with respect to its communications.

Understanding Share Repurchase Programs

  • Share repurchase programs, including the purchase of shares on the open market, issuer self-tender offers and privately negotiated repurchase programs, are often used by public companies wishing to buy back their shares. Counsel must be knowledgeable of the numerous state, federal and other regulatory and compliance requirements related to these types of share repurchases, as well as approval, implementation and disclosure considerations.

Preparing Share Ownership Guidelines and Share Retention Policies

  • Share ownership guidelines ensure that the financial interests of a company’s executive officers and directors align with those of shareholders by requiring these individuals to reach minimum prescribed ownership levels in the company’s shares within a specified time frame. As scrutiny of corporate governance practices has increased in recent years, many companies have adopted these guidelines. Company counsel is often called upon to draft and review ownership guidelines and retention policies, and should be aware of threshold considerations as well as best practices.

Explore more information about Regulation FD and its impact on using social media. Also try out practical guidance, annotated forms and other efficiency tools for your Securities and Capital Markets practice. Register now for a 14-day trial of Lexis Practice Advisor® Securities & Capital Markets.

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