Social media Websites are revolutionizing the world of marketing communications. The ability to connect with customers through multiple channels on a 24/7 basis provides exponentially greater reach than ever before. Likewise, the ability to gain valuable customer information and intelligence through social media has, in some cases, eliminated the need for costly customer surveys.
In contrast to the more freewheeling use of social media in marketing communications, using social media for investor communications raises an entirely different, and more immediate, set of regulatory risks—primarily rooted in the ever-present Regulation Fair Disclosure. Corporations must pay close attention to compliance requirements related to disclosure, and establish policies that take advantage of social media as a means for enhanced communication, while guarding against violating Reg FD by using a social medium that disseminates material, non-public information only to a select audience of investors. Remember: The Securities and Exchange Commission’s 2008 guidance says the anti-fraud provisions of the federal securities laws apply to blogs and to electronic forums.
