Tweeting corporate disclosures: SEC staff issues guidance permitting hyperlinks to cautionary statements and legends in social media communications

Purpose – To review guidance issued in April 2014 by the staff of the USA Securities and Exchange Commission (SEC) that clarifies how participants in regulated securities offerings, business combinations, proxy contests, and tender offers may transmit required cautionary statements and legends to the securities marketplace via social media technology platforms whose space limitations preclude display of the full text of the required statements. Design/methodology/approach – Examines the new SEC staff interpretative guidance in light of the tension between the disclosure requirements of the SEC’s communications rules and the characteristics of some social media platforms that do not permit compliance with the SEC rules in the same manner as traditional paper-based disclosure vehicles. Findings – The staff’s new guidance permits issuers and other parties to comply with the communications rules by using in their social media transmissions an active hyperlink that connects to the text of the required statements, thereby dispelling the legal uncertainty about the hyperlinking approach that has discouraged parties from using some social media outlets to disseminate information about their transactions. The article notes that the staff’s conditions place important limitations on the use of hyperlinks, especially in connection with the use of popular social media platforms such as LinkedIn, Facebook, and others that do not impose a cap on the number of characters or amount of text that may be included in a communication, and fails to address the permissibility of other approaches to overcoming the space limitations of some platforms. Originality/value – Provides expert guidance from experienced securities lawyers.