1. Preparing tweets in advance of the call.
2. Providing a link to the materials associated with the live event.
3. Proactively soliciting questions in advance.
4. Consistent use of #hashtags.
5. Appending tweets with your ticker symbol.

As I mentioned last week, I thought a separate post on disclaimers was warranted.  So this post is dedicated to some specific examples from our research on how companies are using disclaimers for live-tweeting events.

We’ve been conducting our research on how public companies are using social media for investor relations for the past few years now. So we’ve had quite a few discussions with IROs and IR professionals. More often than not, the conversation begins with questions about the compliance issues and potential risk of violating Reg FD using social media to share investor information.

We’ve also had many conversations with legal representatives such as Caroline Clapham who have taken the time to share their thoughts and insights on the topic of social media for investor relations.  Caroline is a securities and M&A lawyer at Fasken Martineau in Vancouver, Canada.  I met Caroline on Twitter earlier this year after reading an article she wrote for her firm on how companies can use social media and maintain compliance with Canadian securities laws. Since then, we have stayed in contact.

Caroline feels that the best practice is to have a general disclaimer in a company’s Twitter profile (usually by link), and then include shortened links within tweets that require disclaimer language, whether triggered by National Instrument 43-101 or by the inclusion of forward-looking information in the tweet itself.

Caroline said:

because tweets can be searched and located as stand-alone statements, the conservative approach is to include appropriate disclaimers embedded by link in each tweet. This minimizes the risk that an investor or potential investor might come across an individual tweet and rely on it as a hard fact.

To-date, I haven’t seen anyone use disclaimers as outlined above, but in my opinion this is a logical approach.

Now for some examples of how companies are using disclaimers to live-tweet their earnings call, annual shareholders meeting and analyst/investor day on Twitter….please note that we are not saying one way or another that any of the following examples we provide are right or wrong.  Instead, as usual, we are merely sharing some observations from our research on this front to inform the IR community.

Earnings Call

In our research, we are seeing companies provide a link to their FLS before they begin tweeting their earnings call and then one more time when the event is over.  For example, before Polycom begins live-tweeting their earnings, they issue a tweet (like the one below) that links to forward-looking statements:

Once they are done live-tweeting the earnings call, they finish off the sequence of tweets reiterating where their forward-looking statements can be found:

Companies are also using StockTwits to provide real-time earnings news. In addition to appending their tweets with their $TICKER tag and #hashtags unique to their earnings announcement,  companies often use a disclaimer at the start of the session for compliance, comprising of a Safe Harbor and non-GAAP Financial Measures Statement.  For example, like the LivePerson message below:

Annual Meetings

Johnson and Johnson also incorporate disclaimers for live-tweeting their annual meeting.  After an initial tweet that provides a link to the annual meeting webcast details: http://twitter.com/#!/JNJComm/status/63603179081834496,
as they discuss their first quarter earnings at the annual meeting, they provide a link to the forward-looking statements in their quarterly earnings release:

Analyst/Investor Days

More companies are also tweeting about meetings with analysts and institutional investors. For example, Exxon Mobil invited followers to listen in to their analyst meeting being held at the New York Stock Exchange:

The url provided in the above tweet: http://bit.ly/hjeaZV links to the webcast notice, presentation and forward-looking statements that all reside on the company’s website:

In addition to live-tweeting, I thought it would be useful to provide some other examples of how companies are using disclaimers on Twitter.

As we know, Twitter is limited to 140 characters, so we are seeing companies include a shortened disclaimer which links back to the full disclaimer (which is housed on their website). For example, Zimtu Capital Corp. provides a ‘Terms of Use’ link in their bio which links to their website:

As you can see, they prominently display the link to their disclaimer in their company bio at the top of their Twitter profile.  Doing so, helps make it easy for followers to see the link and subsequently read the terms.

Potash Corp. also provides a disclaimer on their Twitter profile page.  Although instead of linking to it on their website, they have written out the entire disclaimer as it relates to their tweets on the left-hand side of their Twitter profile:

Note: you can see the disclaimer in its entirety by viewing their @potashcorp account on Twitter.

I’d love to hear of any other examples of how disclaimers are being used by public companies on Twitter. Please let me know in the comments section.

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In a bid to get a handle on the situation, in late 2009, the FDA issued a Call for Comments on their public notice:  Promotion of Food and Drug Administration-Regulated Medical Products Using the Internet and Social Media Tool.

In response to the FDA’s call, in March 2010, AstraZeneca responded to the FDA’s notice and asked them ‘to adopt guidance that will enable AstraZeneca and others in the industry to fully engage in real-time, social media conversations that responsibly provide accurate, balanced information on medicines from a known, identifiable and reliable source.’

To this end, as part of their comments AstraZeneca outlined five principles they believe should be at the core of any company engagement in social media:

1. Truth and Accuracy: Content must be created, developed, or made available that is truthful, balanced, accurate, and not misleading.
2. To Be Respectful:  Encourage product sponsor participation that respects the interests of patients, caregivers, and health care providers, particularly related to matters of privacy and the primacy of the patient/physician relationship.
3. Protect and Advance Patient Health: Facilitate patient access to quality information for use with their physician to improve their health and protect patients through encouraging accurate and timely reporting on medicine safety.
4. Transparency: Any product sponsor participation should be accomplished in a manner that, at all times, is entirely transparent to other participants as to the role of product sponsors as participants in online discussion.
5. Respect the Views of Others: Acknowledge that patients, caregivers, clinicians and others who participate in social media have their own opinions and that, when they differ from those of the product sponsor, it is not the role of a product sponsor to censor or limit these views but to add the product sponsor’s own views to the discussion.

While waiting for all of the final submissions to the FDA’s inquiry into social media, in the fall of 2010, AstraZeneca held a roundtable in New York and Philadelphia that sought feedback on their submission to the FDA’s Call for Comments.

The roundtable focused on AstraZeneca’s principles and regulatory framework and included an open discussion about the role of the FDA and the pharmaceutical industry in social media. The participants included a number of influential health bloggers, online thought leaders, health bloggers and digital stakeholders.

As a result of the roundtables, AstraZeneca felt it appropriate to compile the ideas garnered from these sessions and recently issued a whitepaper: ‘Social Media in the Pharmaceutical Industry.’

The whitepaper includes the company’s feedback garnered from the roundtables and suggested approaches for the FDA to take into consideration when putting together the guidelines. It also outlines some key actionable steps the company will be taking to ensure their participation in social media continues to be in line with the best interests of patient health:

1. AstraZeneca’s Social Media Principles Will Stay in Place (for now) – Given the positive feedback from the roundtables, for now the company will not modify the five principles but instead to maintain the more generalized approach to allow for greater flexibility. They will however establish a regular review of the principles to allow for revisions based on, among other things, changes in technology and/or patient and other stakeholder expectations.
2. Proposed Regulatory Framework Will be Reviewed – AstraZeneca will consider revising its proposed regulatory framework to better align with how information is provided and presented online.
3. Patient Advisory Panel is Under Consideration – AstraZeneca has taken preliminary steps to investigate how they would establish patient groups as a means of seeking feedback on their social media engagements as well as setting forth expectations for all participants.

AstraZeneca’s response to the FDA’s initial Call for Response, their interest in hearing and gathering opinions from others who are impacted and the release of their whitepaper are all important developments for public healthcare companies.

For example, product information can be relevant to all stakeholders – especially for individuals (or someone they know) who is taking a particular medication produced by the company.  This information can also be of interest to investors. For example, imagine someone tweets or posts on Facebook some negative side effects of a drug.  If this information becomes viral it can negatively impact the share price.  It then becomes imperative for the company to monitor the conversations and use the same channels that the information is being shared – that way they can have a voice if they deem it appropriate to respond.  Particularly if the information being shared is misleading or incorrect.

A similar situation that may be relevant to all shareholders is if an individual on a particular medication openly asks a question on Twitter or Facebook.  If the company is using the same channels, this scenario then becomes an opportunity for the company to address the question, thereby establishing itself as an authority on the topic.  After all, who better to answer the question, then the company who manufactured the product?

Astrazeneca has established a presence in the digital space through their use of YouTube, blogs, Twitter and Facebook by typically providing corporate, non-product information.  They clearly outline the social networks they participate in a dedicated ‘Social media sites’ tab in their ‘About Us’ section

http://www.astrazeneca-us.com/about-astrazeneca-us/social-media/.

However, it is interesting to see how their use of social media to share corporate information has brought the sharing of product information and the implications of doing so to the top of the priority list for the FDA.

It will be interesting to see what guidance the FDA will provide and when in this highly regulated industry.

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Google intends to make future announcements regarding its financial performance exclusively through its investor relations website.

Google is able to do this based on the SEC guidance from Aug 2008 regarding the use of websites for disclosure. This guidance states that under certain circumstances, companies can rely on their websites and blogs to meet public disclosure requirements under Reg FD.

As we all remember all too well, shortly after this regulatory change the market collapsed and this new channel quickly faded into the background, while most companies fought to survive the worst recession many of us have ever seen.

However, with 2009 behind us and the recovery underway, the first quarter of 2010 has seen the most activity on the web disclosure front yet, with a number of companies testing out new tactics. Let’s take a look at some examples.

BGC Partners (Nasdaq: BGCP)

BGC Partners, Inc. (BGCP 6.51, 0.00, 0.00%) , a leading global intermediary to the wholesale financial markets, today announced that it plans to issue an advisory release after the close of market on Wednesday, May 5, 2010, notifying the public that a complete and full-text financial results press release has become accessible at the “Investor Relations” section of http://www.bgcpartners.com.

Expedia (Nasdaq:EXPE)

Expedia, Inc. (Nasdaq: EXPE) today announced fourth quarter and full year 2009 results through a press release that is available now at http://www.expediainc.com/ir.

From Q4 Earnings Call – Seeking Alpha Transcript “You may also have noticed we have changed the way we are distributing our earnings release. Rather than put the release out over the newswire, we are pointing people to our IR site where they can pull down the PDF version. You should expect us to continue this practice going forward.”

Google (Nasdaq:GOOG)

MOUNTAIN VIEW, CA–(Marketwire – April 15, 2010) -   Google Inc. (NASDAQ: GOOG) has released its first quarter 2010 financial results. Please visit Google’s investor relations website at http://investor.google.com to view the earnings release. Google intends to make future announcements regarding its financial performance exclusively through its investor relations website.

Marathon Oil (NYSE: MRO)

HOUSTON, April 6, 2010 – Marathon Oil Corporation (NYSE: MRO) announced that the Company will begin issuing advisory news releases notifying investors and other interested parties when new and material information is available on its website, in compliance with the U.S. Securities and Exchange Commission’s guidance regarding “notice-and-access” news releases. With this change the issuance of full-text financial news releases via a wire service will be discontinued.

Reis (Nasdaq: REIS)

Reis, Inc. (Nasdaq:REIS), a leading provider of commercial real estate market information and analytical tools, announced that it plans to issue an advisory release before the opening of The Nasdaq Stock Market on Monday, March 15, 2010, notifying the public that a complete and full-text financial results press release has become accessible at the Investor Relations portion of Reis’s website (http://www.reis.com).

Tellabs (Nasdaq: TLAB)

NAPERVILLE, Ill., Jan. 26 /PRNewswire-FirstCall/ — Tellabs is announcing its fourth-quarter and year-end 2009 results and new quarterly dividend. A complete version of the news release is available at http://www.tellabs.com/news/2010/4q09.pdf.

We are certainly still in the early stages of web disclosure, however it is interesting to note that only Google has announced the intention to use its website exclusively and to no longer use advisory releases (aka “notice and access” press releases) . For the rest, each has moved to a shorter release with a link to their IR website for the details.

As expected we have heard from both sides of this debate, pro web disclosure and pro wire disclosure. Here are two of the popular posts:

Google moves to web disclosure for Reg. FD
http://www.irwebreport.com/daily/2010/04/16/google-moves-to-web-disclosure-for-reg-fd/

Is Google’s Latest Move Evil?
http://www.fool.com/investing/high-growth/2010/04/19/is-googles-latest-move-evil.aspx

In addition to the above posts I’ve been a part of two great discussions on the topic on LinkedIn. Both in the NIRI group (you have to be a member of NIRI to view) and also in the IR 2.0 group.  Each provides a good balance of opinion on the pros and cons of web disclosure.

In general, I think that only large companies with a significant following are a good fit for web disclosure. Companies like Google and other well known brands, have the ability to use their websites as a recognized channel of disclosure and can instruct the market to use their site and all available alert options (email, RSS, social) to keep abreast of news.

For most companies, either continuing to use a full-text press release alongside with posting it on their website or using an advisory/notice and access release are the two remaining options.

I am not against using press releases. In fact here at Q4, we use press releases when announcing big news.  I can easily say it is not a silver bullet, but used in conjunction with web and social channels, press releases can help increase awareness about your company.

Having said that, I think that the hybrid approach of continuing to use the wire to publish advisory releases that link to the IR website for detail(s) is where the market is headed.  The examples previously mentioned are an early indication that this approach may be the one most widely adopted going forward.

Using advisory releases gives companies the additional reach that a newswire can offer, while keeping costs down, and directing investors to the website for the details.  Linking to the website provides many search engine benefits for the company and gives them an opportunity to build direct relationships through subscription options like email, RSS and social channels.

It’s important to note, if you are going to direct investors to your site, you need to make sure it is ready for them.  IR website best practices, enterprise level hosting and accessibility + mobile access are all important areas to focus on to ensure that you can leverage the increased traffic to your site.

The benefits of using your IR website in this matter include:

• Improved disclosure & transparency – linking to your website allows you to share Excel files and formatted documents, which give investors more context and downloadable assets than reading the news on a third-party website.
• Improved efficiency –  putting the full-text release on the website allows you to manage only one version of the release and related financial tables , no longer will you have to juggle multiple versions with the newswire
• Increased investor traffic – linking to your website as a recognized disclosure channel will increase the number of investors to your website and allow you to provide more context  around your business
• Increased direct subscriptions and followers - with more investors visiting the website, there is an increased opportunity for them to register for email alerts, RSS and social updates –allowing you to build relationships directly.
• Reduced costs over time – moving to advisory releases reduces costs simply because these releases are shorter and commercial wires charge by the word.

We’re going to keep track of this trend and will report back in Q2.  If you know of other companies using these tactics, please include in the comments or share with us on Twitter or LinkedIn.

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The founders of Agoracom are set to appear in front of the OSC at the end of April, where we assume we will all hear more details of the allegations and the defense of Agoracom. I, like many others, await more details before passing judgment on what really happened and to what degree fraud was committed (if at all).

In light of this recent situation, I wanted to take this opportunity to talk about the problems with message boards and the importance of transparency and trust and being successful online.

Similar to Yahoo!Finance message boards, Agoracom uses alias for all members. As you can see from the screenshot below, there no real names listed and there is no further information available on the site on who these people are.

The BIG problem here is the complete lack of transparency. Who are these people? What are their backgrounds, their day jobs, etc? In their current format message boards like this can’t be trusted if anyone can create an alias and “pretend” to be an investor.

The reason why social media works, is because of the trust that is built up over time between real people. This would never work if everyone used an alias and you didn’t know who they were. The best practice across all social media channels is to use your full name in your profile and/or links to further details about yourself.

What would Facebook be like if everyone used an alias? It only works because it’s real people connecting with real people. A great example of this can be seen in some of the Facebook pages used by companies to connect with investors. See TVI’s Facebook page (disclosure: TVI is a Q4 client)

Seeking Alpha is a great example of transparency, a part of their success has come from how transparent the community is, people connecting with people.

On Twitter there are many users that have an alias for the account name, however most people provide their real name within their profile. There are certainly many automated accounts and many fake accounts, however the people with the most influence and benefit to the company are those that are real people being transparent. I know in my own work with social media, being transparent and authentic is absolutely critical to connecting with people online and building trust.

Sure there are Twitter accounts today that are based on aliases and stock promoters are using them to create “fake awareness”. I hope the actions from the OSC sets a precedence that other regulators can use as an example to control this type of fraud.

Social media is about connecting real people. This is true across every line of business using social media, including marketing, public relations and investor relations. Transparency and trust are required to be successful.

I don’t think that these allegations apply to any PR or IR firm tweeting on behalf of a client, as tweeting for a client is very different than pretending to be an investor:

• When posting for a client it is being done under the company account and is being used to assist in the distribution of content and to build a following through engagement with stakeholders. There is nothing underhanded in this approach and this is within regulations and ethics.

• If an IR firm creates an alias account and then pretends to be an investor engaging in discussions with the company and other investors then this is simply lying and is not ethical in any way. Perhaps a case can be made that this is not securities fraud, but it certainly is business fraud and should not be tolerated by companies, regulators or investors.

On a related note, in 2007 Whole Foods’ CEO John Mackey was caught posting messages on Yahoo! Under the name “rahodeb”:

Investigations were launched by the FTC (to block an acquisition) and by the SEC. Ultimately both agencies did not pursue the issue and Mr. Mackey got off. In his own defense Mackey said that he had the right to post under an alias because everyone else did on the message board. Mackey also said that he thought the posts of one man under an alias would never be able to move to the stock and that this was not his intention. However, with posts such as this one posted in Jan 2005, it’s hard to believe his intentions were ethical:

“13 years from now Whole Foods will be an $800+ stock before splits”
John Mackay, CEO of Whole Foods posting as “Rahodeb”.

There are other stories about the CEO of overstock.com using aliases on message boards to spread misinformation, attack his critics and even leak information.

Neither the CEO of Whole Foods or Overstock.com was charged by the SEC for these types of postings. However, it seems the SEC wasn’t doing much enforcement during this period (too many stories to mention here) and I have to wonder if these events happened today would the current SEC react in the same way? Their recent increased judgments related to Reg FD seem to suggest they would react differently.

If the OSC needs to set the precedent that companies and by extension IR agencies can’t create fake investor accounts, then I think this is good for all companies and investors.

As I said early in this post, we’ll all know much more about Agoracom and OSC at the end of this month. Until then I reiterate, I am waiting to get all the details before passing judgment.

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Regulation FD

Last Update: August 14, 2009

These Compliance and Disclosure Interpretations (“C&DIs”) comprise the Division’s interpretations of Regulation FD. Some of these C&DIs were first published in prior Division publications and have been revised in some cases. The bracketed date following each C&DI is the latest date of publication or revision.

Section 101. Rule 100: General Rule Regarding Selective Disclosure

Question 101.01

Question: Can an issuer ever confirm selectively a forecast it has previously made to the public without triggering the rule’s public reporting requirements?

Answer: Yes. In assessing the materiality of an issuer’s confirmation of its own forecast, the issuer should consider whether the confirmation conveys any information above and beyond the original forecast and whether that additional information is itself material. That may depend on, among other things, the amount of time that has elapsed between the original forecast and the confirmation (or the amount of time elapsed since the last public confirmation, if applicable). For example, a confirmation of expected quarterly earnings made near the end of a quarter might convey information about how the issuer actually performed. In that respect, the inference a reasonable investor may draw from such a confirmation may differ significantly from the inference he or she may have drawn from the original forecast early in the quarter. The materiality of a confirmation also may depend on, among other things, intervening events. For example, if it is clear that the issuer’s forecast is highly dependent on a particular customer and the customer subsequently announces that it is ceasing operations, a confirmation by the issuer of a prior forecast may be material.

We note that a statement by an issuer that it has “not changed,” or that it is “still comfortable with,” a prior forecast is no different than a confirmation of a prior forecast. Moreover, under certain circumstances, an issuer’s reference to a prior forecast may imply that the issuer is confirming the forecast. If, when asked about a prior forecast, the issuer does not want to confirm it, the issuer may simply wish to say “no comment.” If an issuer wishes to refer back to the prior estimate without implicitly confirming it, the issuer should make clear that the prior estimate was as of the date it was given and is not being updated as of the time of the subsequent statement. [Aug. 14, 2009]
Question 101.02

Question: Does Regulation FD create a duty to update?

Answer: No. Regulation FD does not change existing law with respect to any duty to update. [Aug. 14, 2009]

Question 101.03

Question: Can an issuer ever review and comment on an analyst’s model privately without triggering Regulation FD’s disclosure requirements?

Answer: Yes. It depends on whether, in so doing, the issuer communicates material nonpublic information. For example, an issuer ordinarily would not be conveying material nonpublic information if it corrected historical facts that were a matter of public record. An issuer also would not be conveying such information if it shared seemingly inconsequential data which, pieced together with public information by a skilled analyst with knowledge of the issuer and the industry, helps form a mosaic that reveals material nonpublic information. It would not violate Regulation FD to reveal this type of data even if, when added to the analyst’s own fund of knowledge, it is used to construct his or her ultimate judgments about the issuer. An issuer may not, however, use the discussion of an analyst’s model as a vehicle for selectively communicating — either expressly or in code — material nonpublic information. [Aug. 14, 2009]
Question 101.04

Question: May an issuer provide material nonpublic information to analysts as long as the analysts expressly agree to maintain confidentiality until the information is public?

Answer: Yes. [Aug. 14, 2009]

Question 101.05

Question: If an issuer gets an agreement to maintain material nonpublic information in confidence, must it also get the additional statement that the recipient agrees not to trade on the information in order to rely on the exclusion in Rule 100(b)(2)(ii) of Regulation FD?

Answer: No. An express agreement to maintain the information in confidence is sufficient. If a recipient of material nonpublic information subject to such a confidentiality agreement trades or advises others to trade, he or she could face insider trading liability. [Aug. 14, 2009]

Question 101.06

Question: If an issuer wishes to rely on the confidentiality agreement exclusion of Regulation FD, is it sufficient to get an acknowledgment that the recipient of the material nonpublic information will not use the information in violation of the federal securities laws?

Answer: No. The recipient must expressly agree to keep the information confidential. [Aug. 14, 2009]

Question 101.07

Question: Must road show materials in connection with a registered public offering be disclosed under Regulation FD?

Answer: Any disclosure made “in connection with” a registered public offering of the type excluded from Regulation FD is not subject to Regulation FD. That includes road shows in those offerings. All other road shows are subject to Regulation FD in the absence of another applicable exclusion from Regulation FD. For example, a disclosure in a road show in an unregistered offering is subject to Regulation FD. Also, a disclosure in a road show made while the issuer is not in registration and is not otherwise engaged in a securities offering is subject to Regulation FD. If, however, those who receive road show information expressly agree to keep the material nonpublic information confidential, disclosure to them is not subject to Regulation FD. [Aug. 14, 2009]

Question 101.08

Question: A publicly traded company has decided to conduct a private placement of shares and then subsequently register the resale by those shareholders on a Form S-3 registration statement. The company and its investment bankers conduct mini-road shows over a three-day period during the private placement. Does the resale registration statement filed after completion of the private placement affect whether disclosure at the road shows is covered by Regulation FD?

Answer: No. The road shows are made in connection with an offering by the issuer that is not registered (i.e., the private placement), regardless of whether a registration statement is later filed for an offering by those who purchased in the private placement. [Aug. 14, 2009]

Question 101.09

Question: Can an issuer disclose material nonpublic information to its employees (who may also be shareholders) without making public disclosure of the information?

Answer: Yes. Rule 100(b)(1) states that Regulation FD applies to disclosures made to “any person outside the issuer.” Regulation FD does not apply to communications of confidential information to employees of the issuer. An issuer’s officers, directors, and other employees are subject to duties of trust and confidence and face insider trading liability if they trade or tip. [Aug. 14, 2009]

Question 101.10

Question: If an issuer has a policy that limits which senior officials are authorized to speak to persons enumerated in Rule 100(b)(1)(i) – (b)(1)(iv), will disclosures by senior officials not authorized to speak under the policy be subject to Regulation FD?

Answer: No. Selective disclosures of material nonpublic information by senior officials not authorized to speak to enumerated persons are made in breach of a duty of trust or confidence to the issuer and are not covered by Regulation FD. Such disclosures may, however, trigger liability under existing insider trading law. [Aug. 14, 2009]

Section 102. Rule 101: Definitions

Question 102.01

Question: If an issuer wants to make public disclosure of material nonpublic information under Regulation FD by means of a conference call, what information must the issuer provide in the notice and how far in advance should notice be given?

Answer: An adequate advance notice under Regulation FD must include the date, time, subject matter and call-in information for the conference call. Issuers also should consider the following non-exclusive factors in determining what constitutes adequate advance notice of a conference call:

• Timing: Public notice should be provided a reasonable period of time ahead of the conference call. For example, for a quarterly earnings announcement that the issuer makes on a regular basis, notice of several days would be reasonable. We recognize, however, that the period of notice may be shorter when unexpected events occur and the information is critical or time sensitive.
• Availability: If a transcript or re-play of the conference call will be available after it has occurred, for instance via the issuer’s website, we encourage issuers to indicate in the notice how, and for how long, such a record will be available to the public. [Aug. 14, 2009]

Question 102.02

Question: Could an Exchange Act filing other than a Form 8-K, such as a Form 10-Q or proxy statement, constitute public disclosure?

Answer: Yes. In general, including information in a document publicly filed on EDGAR with the SEC within the time frames that Regulation FD requires would satisfy the rule. In considering whether that disclosure is sufficient, however, companies must take care to bring the disclosure to the attention of readers of the document, must not bury the information, and must not make the disclosure in a piecemeal fashion throughout the filing. [Aug. 14, 2009]

Question 102.03

Question: For purposes of Regulation FD, must an issuer wait some period of time after making a filing or furnishing a report on EDGAR that complies with the Exchange Act before making disclosure of the same information in a non-public meeting?

Answer: Prior to making disclosure of this information in a non-public meeting, the issuer need only confirm that the filing or furnished report has been accepted for filing on EDGAR and is publicly available on EDGAR. [Aug. 14, 2009]

Question 102.04

Question: During a nonpublic meeting with analysts, an issuer’s CEO provides material nonpublic information on a subject she had not planned to cover. Although the CEO had not planned to disclose this information when she entered the meeting, after hearing the direction of the discussion, she decided to provide it, knowing that the information was material and nonpublic. Would this be considered an intentional disclosure that violated Regulation FD because no simultaneous public disclosure was made?

Answer: Yes. A disclosure is “intentional” under Rule 101(a) when the person making it either knows, or is reckless in not knowing, that the information he or she is communicating is both material and nonpublic. In this example, the CEO knew that the information was material and nonpublic, so the disclosure was intentional, even though she did not originally plan to make it. [Aug. 14, 2009]

Question 102.05

Question: Can an issuer satisfy Regulation FD’s public disclosure requirement by disclosing material nonpublic information in a speech at a shareholder meeting open to the public? The meeting will not be covered by the press, or webcast or broadcast by any electronic means.

Answer: No. Under Rule 101(e), public disclosure of information required to be disclosed by Rule 100(a) can be made either by furnishing or filing with the Commission a Form 8-K disclosing that information, or by disseminating the information through another method or combination of methods of disclosure “that is reasonably designed to provide broad, non-exclusionary distribution of the information to the public.” A meeting that is open to the public but not otherwise webcast or broadcast by any electronic means is not a method of disclosure “reasonably designed to provide broad, non-exclusionary distribution of the information to the public.” [Aug. 14, 2009]

Question 102.06

Question: Does the mere presence of the press at an otherwise non-public meeting attended by persons outside the issuer described in paragraph (b)(1) of Rule 100 under Regulation FD render the meeting public for purposes of Regulation FD?

Answer: No. [Aug. 14, 2009]

Question 102.07

Question: What are the circumstances under which information posted on a company web site (whether by or on behalf of such company) would be considered “public” for purposes of evaluating the (1) applicability of Regulation FD to subsequent private discussions or disclosure of the posted information and (2) satisfaction of Regulation FD’s “public disclosure” requirement?

Answer: The Commission has provided guidance on both of these questions in its interpretive release, “Commission Guidance on the Use of Company Web Sites,” Exchange Act Release No. 58288 (Aug. 1, 2008). [Aug. 14, 2009]

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From my discussions with IROs whose companies have not yet taken the plunge with social media, the likely reasons for CEOs abstaining are concerns about disclosure risk, lack of time and quite frankly a discomfort with technology beyond email and browsing. This is not a slag but rather a reflection of the feedback we’ve been given with respect to senior executives adopting new technologies – oftentimes they simply prioritize other things.  Their social networks happen in other arenas and they may have other senior executives within their organizations actively involved in social media.

The topline results taken from UberCEO’s blog post reveal that:

• Only two CEOs have Twitter accounts.
• 13 CEOs have LinkedIn profiles, and of those only three have more than 10 connections.
• 81% of CEOs don’t have a personal Facebook page.
• Three quarters of the CEOs have some kind of Wikipedia entry, but nearly a third of those have limited or outdated information.
• Not one Fortune 100 CEO has a blog.

In reading the Uber post, be sure to scroll down to the comments. There are references to some interesting articles there as well, such as Doug Cornelius’ of  Compliance Building who shares his compliance risk perspective in ‘Corporate Blogs and Tweets Must Keep SEC in Mind’ and another by Dan Haugen of the Minneapolis Post on Best Buy’s new CEO, “Is Best Buy’s Brian Dunn the Most Socially Networked CEO?”

Should CEO’s get involved in social media? Those that do send a very clear message in terms of their transparency and their personal interest in listening to their stakeholders. Where there’s a willingness to get involved even a busy CEO will find the time with the support of a good team and the use of mobile devices. But the answer to the question in my opinion is really, “it depends”. Most organizations can benefit from involvement in social media but whether it happens with the CEO or other senior level executives really comes down to corporate strategy, division of labour and who would be most effective and committed to continuing the conversation.

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Regulators revealed yesterday that an IT analyst with TD Securities Inc. bought shares in Synenco Energy, based on information he obtained while reading the personal emails of investment bankers working on a takeover bid. And of course, the fact that the emails were being monitored was invisible to all participants.

Apparently there have been a string of recent cases in which people outside the corporate inner circle have been accused of trading on information that was illegally obtained by reading confidential emails.

Although none of the top dogs knew this was going on, regulators say that firms are responsible for ensuring that critical email is not intercepted.

Had any of the companies mentioned in the article been using Q4 PRESS, nobody could have intercepted their emails for privileged information, because no confidential content is ever included within an email or its subject line.

Q4 PRESS allows internal and external teams to collaborate securely on confidential information – even on a BlackBerry . The Author or point person on the document controls who can be invited to participate  and even controls who can be involved in specific segments of the document. Within each version, the entire process is completely transparent  allowing all participants to view the comments and edits of one another.

No confidential information is ever transmitted via email. Subject lines are generic and even the message related to the document can be made secure.

With Q4 PRESS, everything is tracked in real time and is visible to all participants. The entire process can be overseen by a designated auditor/supervisor. A complete report of the entire collaborative process can instantly be generated viewed in a number of useful ways.

Compliance risk management officers take note – unlike the invisible IT administrator in the Synenco story, with Q4 PRESS there’s nowhere to hide!

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The 2008 Year in Review � Securities Litigation and Enforcement, is the first of a regular webcast series on related topics from Securities Docket(an online publication that tracks securities litigation and enforcement developments on a global basis).

This one hour presentation touches on all the big stories: the financial crisis; Siemens bribery; Mark Cuban and a host of other litigations (both successful and not); the Madoff scandal (could you have scripted it better – that the pronunciation of his name is: Made-off ?); the liability exposure of the major accounting firms; the culpability of the SEC in some of the year’s financial disasters and its need for a makeover…

Kudos to Securities Docket for assembling such an impressive speaker panel, all of whom have very worthwhile blogs – which inspired me to write this post:

Kevin LaCroix – an attorney and Partner in OakBridge Insurance Services, an insurance intermediary focused exclusively on management liability. Kevin is a prolific writer of the D&O Diary blog, which he refers to as “a journal from the world of Directors & Officers Liability with Occasional Commentary”.

Tom Gorman – former Senior Counsel with the SEC Enforcement Division, now Co-chair of ABA White Collar  Securities Section and Chair of Porter Wright Securities. Tom’s blog SEC Actions covers SEC investigations, civil and criminal, class actions and internal investigations. Today’s post poses a poignant question,The SEC and the Madoff Scandal: can the Commission Restore Confidence in its Ability to Protect Investors?

Francine McKenna – with a background at PwC, KPMG/BearingPoint, JP Morgan and Jefferson Wells/Manpower, Francine advises professional services firms. Her blog re: the Auditors is an insightful, highly engaging and often very funny look at Corporate Governance issues, the 4 big audit firms, securities regulation, the markets in general…

Walter Olson – a regular contributor to the NY Times and Wall Street Journal and a senior fellow at the NYC think tank . The Manhattan Institute, Walter’s popular blog Overlawyered provides commentary on the American litigation system – it’s anything but dry.

Bruce Carton – editor of Securities Docket, was a former senior counsel in the SEC’s Division of Enforcement. A blog pioneer, Bruce is the author of Compliance Week’s Enforcement Action.

If you’re looking to stay plugged into capital markets issues, these blogs are worth a look.  We’ll write a future post soon on other great blogs that we follow.

At the end of the presentation on the Year In Review, each speaker was asked to provide their predictions for 2009:

• Kevin – we will see an unprecedented surge of securities class action suits, far outstripping 2002. (I told my son he should go into securities law!)
• Tom – predicts a significant reshaping of both the compliance and enforcement divisions of the SEC (and he doesn’t think it makes sense to merge the SEC with the CFTC).
• Francine – says that one of the Big 4 audit firms will be pushed to the brink of failure. (One of her blog readers is egging her on to create a pool predicting timing on this.)
• Walter – believes that a formerly rated Triple AAA firm will either have its executive indicted or will be revealed to be insolvent. (He also made reference to the fact that Triple AAA will soon regain its former meaning as a reference to a bad car accident that required Ambulance… Apolice? Afire truck?  what else starts with “A”?)
• Bruce - predicts that 90% of lawyers will begin to use Twitter for PR. (I hope Twitter can keep up; yesterday it was sooooooo slow.)

With the exception of Bruce’s prediction, sadly none of these are surprising.

For 2009 I peered into my crystal ball, read the tea leaves in my cup and consulted the psychic who left a pamphlet on my windshield  happily 2008 was all about lessons learned (again). The coming year sees us all older and hopefully wiser.

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Most of the companies I’ve spoken with are intrigued by the potential cost savings of disseminating their disclosure without the expense of newswires. Some of the companies I’ve spoken with are busy putting plans in place to meet the new SEC criteria. Others have been made to fear that adopting this method of disseminating information to the market would prevent them from attaining simultaneous disclosure.

Most are wondering what steps they need to take to transition to this model. Although I have dealt with this more specifically in previous blog posts, here is my 1,000 foot perspective:

1.       Inform yourself of what’s possible from a technical standpoint and obtain opinions from a number of sources. To optimize web disclosure according to the SEC’s new guidance, your goal should be to investigate technologies that enable you to easily meet the SEC criteria while minimizing risk for your company. You may have to pay more than you do now for this technology, but taking control of your own distribution will allow you to reallocate some of your newswire costs to ensure a more effective web presence.

2.       Seek strategic communications consulting from experts well versed in IR best practices. Your corporate and investor web site is your most powerful stakeholder communications tool, if properly utilized and promoted. Choosing the right web platform and distribution technologies is only one half of the equation – having a strategic approach to your web communications is the other half. Over the years this has become a science in terms of required/expected content, how to structure the site, how to present your information for maximum impact and usability etc.

3.       Seek independent legal counsel in order to plan your company’s response/transition. 

It is to this end that I bring you an excellent article – a legal opinion penned by Colin J. Diamond, a partner in the securities group at the New York office of White & Case LLP – on ‘How to Implement the SEC’s New Guidance regarding the Use of Company Web Sites’. This recent article appeared in the November/December 2008 edition of The Corporate Governance Advisor.

The article is very easy to understand and comprehensive in its approach.  Colin examines each aspect of the SEC guidance and deals with it in detail.  I have provided an excerpt from the article below – a great chart that examines key factors of the SEC guidance along with how to respond to each. I highly recommend that you read the entire article and use it (or something like it) as a foundation on which to examine how to approach the guidance from a technical and communications standpoint.

[1] Note that an earnings release will in any event need to be filed with the SEC pursuant to Item 2.02 of Form 8-K.

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Following the U.S. election, changes will be focused on the financial sector (no surprise) and also include large corporations who rely on the wholesale or public debt market to finance their operations. 
 

The degree to which an entity relies on the debt markets to finance operations (eg. General Electric or the large automotive companies) is a key consideration in determining the disclosure required of these organizations. If the company’s counter parties are pillars of financial institutions and if the reliance is significant enough that the company would not be able to fund itself, if for some reason it was unable to roll over its debt, the impact would be considered systemic in terms of the ripple effect on the economy. Companies fitting this profile will be impacted by new disclosure legislation.

We can anticipate fairly draconian requirements in the coming months – a whole new wave of requisite disclosure that we’ve never seen before. It will certainly mean additional filings as well as new/more information needing dissemination to the market.

Included in this, we can anticipate the need for much greater detail surrounding the content, risk and backing of investment products.

And companies will need to be much more upfront about their own risk exposure and appetite along with details on how they’re managing this risk.

What policy makers have learned from the past is the need to get enough of the right information into the market to gain a perspective on trends and that means an insistence on information being disclosed in a compatible manner.

The goal of the enhanced disclosure is to not only protect investors and the economy at large, but also to promote a more responsible approach to managing companies, which was clearly lacking in the financial sector over the past several years.

The challenge of course for most companies is balancing the escalating demands for timely disclosure against the risks of disclosing inaccurate or incomplete information. Along with the increased disclosure requirements will come the need for retooling existing disclosure controls & procedures and determining whether manual processes, technical solutions or perhaps a combination of both will best help to protect organizations from increased compliance risk.

No matter if McCain or Obama wins today, change is a foot!

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