Communication via social media is now standard practice, to some extent, at almost all public companies. What once seemed limited to technology and other “forward-thinking” companies has now made its way into even the most traditional businesses.
The SEC, and other affected agencies, have long struggled to stay on top of the breakneck pace of social media innovation (see, for example, this Doug’s Note). And despite their best efforts, many companies continue to lag the latest developments, both in terms of dollars spent on new technology and updated communications policies and practices.
Nevertheless, companies must remain compliant at all times. Public disclosure on social media (even a few casual keystrokes by an employee or business partner) of misleading statements, material non-public information or protected private information may violate a host of laws and regulations.
As you would expect, there is no single formula for staying on top of the changes and remaining consistently compliant. However, adhering to these few fundamental principles will make ongoing compliance more achievable:
- Don’t be lulled to sleep by the casualness of social media communications. Information-sharing has become nearly as existential as breathing in our society. As a result, many employees may not even consider the implications of their latest post. Be sure that all employees, including those at the highest levels (see this Doug’s Note), understand the legal limitations on all communications and the consequences of failure to comply.
- Create flexible compliance processes. The variety of social media options and the sheer number of social media communications continues to expand exponentially, with no end in sight. Be sure your processes are sufficiently flexible and scalable to identify the changes and keep up with the quantity. Compliance procedures implemented today may be obsolete tomorrow.
- Empower employees to use social media, but train them to do it wisely. Gone are the days when all company communications were funneled through a single head of public relations or investor communications. Recognize that effective communication now must be comprehensive and encompasses individuals in multiple positions throughout the company. Frequent and effective training on the proper use of social media will minimize mistakes.
- Take stock regularly of the company’s social media communication methods. As the variety of social networks expand, so does the variety of applicable regulations and affected agencies. Avoid piling new layers of social media on top of old, less useful layers. Cull networks that no longer serve a purpose while adding only those that do.
- Be sure existing disclosure controls and procedures and risk management processes fully cover social media communications. On a macro level, be sure that these procedures and processes are drafted and implemented in a manner that properly captures all social media communications. As with every other aspect of a company’s operations, the related risks must be identified and analyzed at the appropriate levels in a timely fashion. Include appropriate compliance and risk management personnel in the process so that all bases are touched.
The social media genie cannot be squeezed back into a traditional compliance bottle. Companies must be nimble in order to effectively communicate with all of their constituencies. Being sure that your tone of compliance covers all forms of social media communications will help ward off potential problems.
All the best,