Brokers with commercial clients that wish to trumpet their achievements on social media may wish to advise their client to retain a lawyer dedicated to social media postings, or hire a social media risk manager, a blogger suggests.
Failing that, brokers may want to check that their client’s directors and officers insurance will cover the postings of company executives in the social media space.
“Should all companies…have legal counsel review all social media posts representing the company’s views?” asks Emily Holbrook, editor of Risk Management magazine, in an online blog. “Should every company employ a social media risk manager?
“It seems we’re getting there.”
Holbrook’s remark is based on the attention a U.S. regulator has paid to a statement made by Netflix CEO Reed Hastings on the company’s Facebook site earlier this year.
Hastings posted on Facebook in June and July 2012 that members of Netflix, which streams TV shows and movies over the internet, were enjoying “nearly a billion hours per month” of videos. The company said this on Facebook, but did not communicate the same statement in a press release, or in a Form 8-K regulatory filing with the U.S. Security Exchange Commission (SEC).
The statement drew a Wells notice, essentially a cease and desist order, from the SEC on December, 5, 2012. The SEC’s notice threatens civil action against Netflix and Hastings, contending that the statement violated the SEC’s Fair Disclosure regulations. (This has not been proven in court.)
The Fair Disclosure regulations are designed to ensure that individual investors have equal access to information as large institutional investors, by prohibiting selective disclosure of information.
Netflix believes the statement was not “material,” and therefore it was not required to post it in a press release or in a regulatory filing.