Executives Beware: The S.E.C. Doesn’t ‘Get’ Twitter

Do the executives at your company know that if they tweet about recent (and especially, pending) company transactions on Twitter, they could be violating securities laws?

Although we know that just 18% of CEOs use social media, you should still be aware – just in case.

Zipcar was acquired by Avis and it was reported web-wide. The CEO of Zipcar, Scott Griffith, was obviously thrilled. He gave interviews and sent tweets about the deal:


And that tweet caused a bit of a headache for his company, according to The New York Times.

Mr. Griffith’s 86-character message, however, created extra work for the legal department at Zipcar, which by the end of the day Friday had made a filing with the Securities and Exchange Commission disclosing it to Zipcar’s investors.

Zipcar’s filing also mentioned that Mr. Griffith appeared on CNBC to discuss the Avis deal, and attached a copy of the transcript of Mr. Griffith’s discussion with the program’s hosts.

Why did they need to do this?

Zipcar made the S.E.C. filing about Mr. Griffith’s Twitter message because the transaction with Avis is subject to Zipcar’s shareholder approval and securities laws dictate that the company must file with regulators any announcements that could be construed as soliciting shareholder votes.

Ah, well THAT makes sense, we suppose. Though the S.E.C. probably wouldn’t have made a fuss over it as it doesn’t view Twitter and Facebook as very “broad communication vehicles.” Not like, say, a press release (which we all know everyone reads):

A Netflix chief executive made a Facebook post and “the S.E.C. said it was concerned about whether by posting the information on Facebook instead of a broadly issued news release, Mr. Hastings was disclosing material information to select investors. In so doing, Mr. Hastings potentially violated the Regulation Fair Disclosure rule, commonly known as Reg FD, which requires a company to announce information that is material to its business to all investors at the same time.”

So if executives at your firm assume (as any reasonable person would) that sharing news on Twitter and Facebook counts as “public” disclosure (because it is), you might want to post a press release on the topic somewhere as well, just in case the S.E.C. objects to your new-fangled approach.

Maybe someone could send them a copy of The Tao of Twitter?

(Hand from computer image from Shutterstock)