December 10, 2013

Jenner & Block Partner Reid J. Schar and Associate Laura C. Bishop wrote an article for Today’s General Counsel in which they advise company lawyers on the social media policies needed to limit risk from inadvertently violating U.S. Securities and Exchange Commission disclosure laws.  Titled “Crafting a Social Media Policy, with the SEC in Mind,” the article explains that SEC guidance now permits the use of social media to disclose information to investors in limited circumstances, but companies still need to take steps to control risk from non-compliant disclosures.  The authors recommend model social media policy provisions that companies should implement to avoid regulatory risk, informed by Foreign Corrupt Practices Act precedent and leading industry policies.  The newly developing risk addressed by the authors emerged in the wake of a controversy in which the SEC recommended enforcement action against Netflix and its CEO, Reed Hastings, after Hastings released on his personal Facebook page information about the company that the SEC said could be “material.”  Ultimately, the SEC decided not to purse action against Netflix and clarified its position on the use of social media.  “The recent guidance authorizes an officially sanctioned personal account as an avenue for disclosure of regulated company information,” the authors write, but recent events demonstrate “that there is uncertainty, even among regulators, as to the proper use of social media."