A concise communications writer may be able to pack plenty of information into a 140-character tweet to investors. But tweeting along with disclaimers and legends would stymie even the best.
So the SEC has provided fresh guidance to specify that companies can use hyperlinks to disclaimers and legends in their tweets and other length-restricted posts to investors, directing them instead to the supplementary information through a shortened link.
The guidance states that companies can use hyperlinks when using ‘a platform that has technological limitations on the number of characters or amount of text’ and ‘including the required statements in their entirety, together with the other information, would cause the communication to exceed the limit.’
The commission says a hyperlink can be used only when the communication ‘conveys, through introductory language or otherwise, that important or required information is provided through the hyperlink.’ Social media platforms that do not have restrictive character limitations, such as Facebook and LinkedIn, must still include the full text in the body of any message to investors, adds the SEC.
The decision is ‘likely to be especially welcome in high-tech industries where such media are an increasingly vital communications platform,’ says the SEC. ‘Dueling tweets have featured prominently in recent activism campaigns and proxy fights involving high-tech companies, most notably eBay’s defense against a proxy contest launched by Carl Icahn.’
The SEC’s new guidance also clarifies the use of social media in proxy fights, with the regulator noting that ‘companies and their boards will have to be prepared to defend against such attacks and might consider establishing a social media rapid-response team in order to improve their own social media profiles, leverage their networks of friendly followers and ensure all participants are co-ordinated with the company’s messaging in the case of an attack.
‘If the third party is neither an offering participant nor acting on behalf of the issuer or an offering participant, and the issuer has no involvement in the third party’s retransmission beyond having initially prepared and distributed the communication in compliance with either Rule 134 or Rule 433, the retransmission would not be attributable to the issuer.’
The guidance was meant to clarify the SEC’s decision issued a year ago that allows companies to use social media outlets ‘like Facebook and Twitter to announce key information in compliance with Reg FD as long as investors have been alerted about which social media will be used to disseminate such information’
