Did you know that investors are looking to social media more frequently for investing information? According to a Brunswick Group study, 47% of institutional investors read financial blogs for investment research and ideas; 20% of them have even used blog research to execute a recommendation or investment decision.
Looking at stats like these, it’s no wonder that more and more investor relations programs are incorporating social media strategies. It’s a great way to increase the lines of communication between a company and its various stakeholders.
Increased communication doesn’t have to mean increased risk. While the fast-paced nature of social media may seem like a more informal way to communicate with investors, disclosure rules and considerations should be taken just as seriously as any other investor communications. Companies employing social media in IR can minimize their additional risk by having their Disclosure Policies and the Employee Codes of Conduct include the use of social media to ensure that securities laws are complied with and liability is avoided.
Things to consider:
- Create a Disclosure Policy (NP 51-201 Section 6.2 – it is best practice for issuers to have a written policy) and ensure that employees are aware that, under the policy, undisclosed material information cannot be communicated directly to the market.
- For social media, include limits as to who can participate in the communication, rules related to the type of information that can be disseminated, procedures for information approval and how the media will be monitored.
- Investor information that is disclosed via social media networks should generally be restricted to material that has been previously disclosed through traditional methods of disclosure (such as press releases and Sedar filings).
- Blogs, tweets etc. should link to more fulsome disclosure as tweets do not allow for the inclusion of necessary forward looking information, risk factors etc.
For more on social media and disclosure, check out this month’s Regulatory Pulse (PDF).