Play by the Rules and Stay out of Trouble: Some Tips for Public Companies Engaging in Social Media


Social media has always been “fun” but it is only in the past few years that companies are taking advantage of the ability it gives them to communicate with their investors on a day-to-day basis. While companies may not have the Twitter© followings of Ashton Kutcher or Kim Kardashian, social media is being used by companies today like never before. As of December 27, 2011, for example, Pearson PLC (NYSE: PSO) had posted 4,043 tweets to 1,823 followers, Nordstrom (NYSE: JWN) had posted 15,335 tweets to 156,797 followers, and at the top of the Twitter© following for a public company, Whole Foods Markets (NASD: WFM) had posted 23,655 tweets to 2,151,172 followers. Whole Foods’ numbers effectively mean it is able to communicate with and inform over 2.1 million people and organizations on a daily basis free of charge. That’s pretty powerful.

While websites like Twitter© and Facebook© allow public companies to reach a large audience almost instantly, it is important to be aware that written communications via social media websites are subject to the same securities regulations and other applicable laws as any other written communications. The tips below can help a company benefit from social media while complying with laws applicable to public companies.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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