NIRI 2013 Social Media Workshop Follow up: Monitoring, Policies and the SEC release

16 July 2013

By Contributor



social-media-monitoringFollowing on the blog post I published last week, below is a summary of an interview I had with Broc Romanek, Editor of in which he discusses the importance of listening to online conversations, having a social media policy and the implications of the SEC?s release.

1. Tell us a little bit about yourself

  • I have done the trifecta of legal practice ? private practice, in-house and government (SEC) before becoming quasi-journalist/publisher.

  • I manage nine blogs on our sites, including five that I blog on myself.

  • Just started a ?Take Two? video series, which are two-minute long vids.

2. What are some things that companies should be doing prior to using social media for IR? i.e. monitoring, working with legal, social media policy etc.

  • Monitoring is key ? and not something you want to completely outsource; make sure that key persons in the company know the basics of how to use Twitter, etc.

  • Building the relationship with the legal department is important to using SM effectively; Dell has it down so they don?t have to have Legal review their blog posts every time.

3. How important is a social media policy?

  • Without it, hard to have a justifiable basis to act on what otherwise would be violations of the policy. In other words, putting down rules in writing give employees a warning what is appropriate conduct. Given the troubles that social media can create, a policy is more important in this area than most others.

  • And more importantly, it is a valuable teaching tool ? that?s why a policy should be limited to one page of bullets.

4. Does a social media policy effectively protect a company?

  • It?s a building block; the real protection is a culture that nourishes effective training. By ?effective,? the training should be conducted in a way that runs through real life examples and realistic expectations. The examples should be the types of things that are most likely to happen ? not the outliers that wind up being clearly outside the grey area.

  • One of the hardest parts of dealing with SM is that opinions vary so widely about how it should be leveraged ? as well as it’s still is unclear what is permissible under the securities laws, and other laws as well.

5. How different is the SEC’s new guidance from its 2008 guidance? For example, is notice to the public about use of social media channels effectively only criterion? Or just a?threshold? That is, how much weight should be attributed to the other factors in the 2008 guidance?

  • The SEC?s Section 21A report has the same type of weight as the SEC?s ?08 guidance ? it?s interpretative guidance from the SEC.

  • So far, not much grumbling about need for more guidance ? unlike last time.

  • Biggest change is that opt-in okay so long as not SM not a ?paid? business model.

  • Notice seems to be the most relevant.

  • To me, having the number of followers as part of a regulatory framework seems unworkable. For example, you can buy 25k followers for $5 (or 1k ?real? followers) ? but the SEC did include a factor of ?extent to which info on channel is regularly picked up by market and readily available media?.

  • Note that SEC?s ?08 release never mentions the term ?search engine optimization? (SEO) even though that?s what it?s mostly about.

6. Is there a difference in protection between filing an 8-K Form versus other ways of providing notice of social media channels such as a press release?

  • 20 8-Ks filed so far, and there are several different approaches to how companies are disclosing their SM: 80% specify channels; some punt by disclosing that they will list the channels on their IR webpage or by generally mentioning SM (this latter approach clearly is problematic).

  • 35% have 4 or more channels disclosed ? two have six (MMax & Soundbite).

  • Most interesting 8-K is from ChannelAdvisor, which specifies a blog and expected dates of disclosure of same sales reports.

  • John Palizza and I had an interesting dialogue on May 31st in his ?Investor Musings Blog?: I said that ?CYA approach actually is problematic. SEC Staff is not happy with those companies?announcing a bevy of SM channels for which they have no real intention of using them as investor communication venues. And investors probably don?t want to be forced to track a bevy of channels for which the company doesn?t intend to provide useful info for them. It?s a loser on both fronts.?

  • John?s response is ?I recognize that it’s problematic, but it is a problem the SEC created. If I was a general counsel, and I had the opportunity to create one more layer of insulation from Reg FD claims, I would grab it. Fear of Reg FD retroactive enforcement is a giant bugaboo for many companies, so doing everything you can to lower the chance that the SEC will open an investigation makes sense. From an investor’s standpoint it is a real headache to follow multiple feeds, but most investor relations departments will take the view that it is not their job to make the analysts’ job easier.?

7. How much protection does a notice really provide a company about what they disclose in social media channels?

  • I believe there is too much paranoia about Reg FD compliance. Just because a statement may be Reg FD compliant (eg. because a CYA channel was created), it isn’t insulated from a 10b-5 claim that the statement was misleading or omitted something, which will be the much more likely result – and much more serious result – when something “material” is posted on a SM channel, particularly Twitter which is limited to 140 characters.

  • Problems with live tweeting Q&A during earnings calls ? it is hard to tweet bad news and there is a need to be balanced.

8. From a lawyer’s perspective, should IROs be using social media?

  • As we all know, it?s the lawyers job to say ?no.? Then, it?s the IRO?s job to take that into account when making a reasonable decision. To work with Legal, I recommend that you illustrate how you are informed and kill them with kindness. Show them the Dell blog and Twitter feeds that are successful. Draft content for their review to illustrate what you want to do so they can come to trust you.



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