Sullivan & Cromwell Partner and Practice Center Contributor, Frank Aquila, just sent along an article he co-wrote with Partner Sarah Payne for Bloomberg Law. The article presents some issues for legal and investor relations teams to consider as they seek to increasingly use social media to communicate with investors. Here is an excerpt:
Over the past few years, companies’ use of corporate blogs and social media sites to communicate with members of the investment community has grown significantly, to the point that some companies have abandoned traditional media outlets for release of their earnings announcements.
Although the recent announcement by Netflix that it received a Wells Notice in connection with a Facebook post has put renewed focus on this area, use of these communications tools by a company’s investor relations and public relations departments is likely only to intensify in the future.
Investor relations departments are rightfully focused on getting their companies’ messages out clearly and quickly; as a consequence, they may be frustrated by legal restrictions that seemingly conflict with the corporate disclosure goals of transparency, clarity, and plain English.
At the same time, because these forums are real or near-time communications that can survive indefinitely, with little or no ability to fix errors, and are often in abbreviated formats, corporate legal departments need to work closely with IR and PR departments to craft appropriate guidelines.
Complicating matters is the fact that existing legal frameworks were not drafted with these new forms of communication in mind. This simply means that lawyers will often have to be creative in forging a path through social media that does not run afoul of legal requirements while at the same time meeting the company’s investor relations objectives. Challenging for sure, but no doubt achievable.
Click here for the complete article Investor Relations in the Social Media Age by Frank Aquila and Sarah Payne.