Disclosure Dilemmas: Social Media Increase Possible Risk of Releasing Material Information

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Belts and Suspenders

As a result, securities lawyers suggest what Hogan & Hartson Partner Daniel Shea calls a cautious "belts and suspenders" approach of using traditional methods of disclosure, in addition to disclosure via the Web or other media.

Some disclosure missteps with social media already have occurred. In 2008, an eBay corporate blogger began "tweeting"-- posting updates on Twitter--during eBay's quarterly earnings calls without including required regulatory disclaimers. eBay declined a request for an interview for this story. But notes on the blog suggest that the blogger was called to task by company lawyers and agreed to follow specific rules to comply with disclosure requirements. In October 2009, prior to the third quarter earnings call, he announced he would not be able to provide live tweets. Instead, he provided links to the company earnings release and to listen in on the call.

Some companies use Twitter in conjunction with quarterly earnings calls, but in a carefully controlled way. Prior to the call, they prepare tweets verbatim from the conference call script and including the necessary disclaimers, ensuring that only information mentioned on the call is posted on Twitter.

Michael Kozubek

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