The Securities and Exchange Commission has provided fresh guidance for companies that use social media to communicate with current and potential investors.

One of two new Compliance and Disclosure Interpretations from the Division of Corporate Finance addresses the use of required legends and disclosures that accompany traditional, paper-based communications and how they should be handled when Twitter “tweets” and other postings limit the number of characters or amount of text that can be used.

The guidance explains that SEC will not object to the use of a hyperlink within an official post to guide interested parties to the required disclaimers, so long as the platform has set limitations on the number of characters that can be used and the required statements in their entirety, together with the other information, would exceed that limit. Existing text must make it clear that the hyperlink leads to that important information.

The guidance stops short of explaining what the language accompanying the hyperlink must say, which could prove problematic as that text could eat up most of the character allotment.  A separate piece of guidance does, however, address the problem of what happens if a retweet, in the case of Twitter, removes the original hyperlink. The SEC says there will not be repercussions if the third party sharing the information is not an offering participant, acting on behalf of the issuer, and the issuer has no involvement in the re-transmission beyond having initially prepared and distributed the communication.

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