On April 2, 2013, the SEC issued a report and press release making it clear that companies are permitted to use social media outlets to disclose information in compliance with Regulation FD. More on the SEC's report and press release can be found in the April 15, 2013 issue of Holland & Knight's Securities and Financial News to Note. Recently, in response to the SEC's guidance, the NYSE disseminated a letter to all NYSE-listed companies to remind them that companies must continue to remain cognizant of the NYSE's procedures for public release of material information when those companies consider making announcements via social media.
While the NYSE letter demonstrates the exchange's approval of the SEC's stance on disclosure of material information via social media, the NYSE letter also serves to remind listed companies that incomplete or indiscriminate disclosure can increase market volatility, and that the NYSE has implemented certain rules and procedures to protect investors from such volatility. The NYSE letter emphasizes that Section 202.06(B) of the NYSE Listed Company Manual requires any company making an announcement expected to materially affect the market for the company's securities during market hours (9:30 a.m. to 5:00 p.m. EST) to notify the NYSE by telephone at least 10 minutes prior to the release of the announcement. The purpose of this notice requirement is to inform the NYSE of the substance of the announcement and the means by which the company intends to disseminate the news. The NYSE letter stresses that these rules and procedures were adopted to allow the NYSE to determine whether a temporary trading halt of the listed company's securities will need to be put in place in order to allow investors to evaluate the news and adjust their positions accordingly.
The NYSE letter concludes by further emphasizing certain NYSE procedures regarding the disclosure of material news developments. The letter reminds companies that company representatives selected to notify the NYSE about material announcements must be able to discuss all of the details of the developments surrounding the announcement and answer any questions. The NYSE letter also provides a list of examples of news that the NYSE considers to be material, which includes earnings, mergers and acquisitions, securities offerings and pricings related to those offerings, major product launches or new patent approvals, and dividend announcements. The NYSE letter notes that the list is for example purposes only, and does not serve as an exhaustive list of material events that would trigger disclosure obligations under Regulation FD or Section 202.05 of the NYSE Listed Company Manual.