Tread carefully when using social media for business purposes

May 02, 2013 (Press-News.org) Tread carefully when using social media for business purposes

Article provided by Millstone, Peterson & Watts, LLP
Visit us at http://www.mpwlaw.net

Early in April, the Securities and Exchange Commission (S.E.C.) released new guidelines regarding the use of social media by businesses. The guidelines address disclosures by companies who use social networks including such outlets as:
-Facebook
-Twitter
-Blogs
-LinkedIn
-Google Plus+
-Hootsuite -- a social media management system

The newly established guidelines were a result of some perceived missteps by large corporations over the past few years. As the U.S. delves deeper into the new era of social media use, publicly traded companies are jumping on board the communication train and there is a concern that trade secrets or classified information may be leaked inadvertently. A few companies have had their wrists slapped by the S.E.C. in the past year for inappropriately disseminating company information.

Netflix's chief executive congratulated his team for exceeding an important company benchmark in a post on his Facebook page. The S.E.C. threatened to take action against the company for violation of Reg FD -- Regulation Fair Disclosure -- that requires that all investors receive publicly published information at the same time. Francesca's Holdings, a fashion retailer, fired its CEO based on his frequent use of Twitter and Facebook, stating that he improperly communicated information about the company.

The S.E.C. relaxes its grip

Normally, companies disseminate information via securities filings or news releases. Many also utilize their own websites or the S.E.C.'s public filing system -- also known as Edgar. The expansion of the use of technology for communication has necessitated a change.

By establishing new disclosure guidelines, the S.E.C. has relaxed its stance regarding the use of various means of social networking. However, there is one caveat: corporations must inform their investors that social media may be used for dissemination of company information and announcements, and they must specify the vehicle utilized, such as the specific Facebook page or Twitter feed they intend to use.

Using social media wisely

While many companies have a high percentage of employees who routinely use social media, few have guidelines for its use. Large corporations are not the only ones exposed to liability for inappropriate use of social networking and it is important for all companies to set some rules. Each business should establish company safeguards such as the following:
-Set up a social media policy for employees
-Emphasis the importance of keeping posts and tweets professional
-Properly cite sources of information, photos and other content
-Monitor sites for criticism and feedback in order to respond appropriately
-Google your company on a regular basis to check for inappropriate or incorrect postings

Engage a lawyer

There are many pitfalls that can ensnare a company. Consulting an experienced business lawyer who is experienced with intellectual property and technology issues may be able to help your business stay out of legal trouble.