CANADIAN IR PRACTITIONER PERSPECTIVE – Guest Column

For much of the past two decades, I have led investor relations for public companies in Canada. These corporations all had significant operational and capital markets exposure to the U.S., so when I became the head of communications for a New York-based financial services company a year ago, I thought I was well prepared for American corporate culture. Yet I have encountered many cultural differences in the U.S. capital markets landscape that have challenged some of my long-held communications practices.

Among the differences is the attitude toward social media as a tool for business and financial communications.  

The SEC provided guidelines around social media in 2013 that were landmark recognition of the evolving nature of communications. They authorized the use of social media outlets like Facebook and Twitter for disclosure of key information so long as investors had been alerted that social media would be used to disseminate the information.

Four years later, there are few public companies in the U.S. using social media platforms for disclosure of material, non-public information, other than some notable exceptions within the technology sector. But the SEC’s acceptance of social media as a tool for corporate communications has allowed a more cavalier attitude by public companies toward these platforms than I expected and was accustomed to in Canada.

Even as the SEC opened its arms to social media, Canadian regulators cautioned that social media may be used only to supplement financial disclosure that has already been disseminated by traditional means such as mailings, news releases and conference calls.

In March 2017, the Canadian Securities Administrators (CSA) reinforced its position with the publishing of a notice, observing that social media communications have resulted in selective, early, and even misleading disclosure by some issuers.

Specifically, the CSA found in its review of social media disclosure that this method often did not “provide a complete picture or is inconsistent with information already disclosed by issuers on (SEDAR)”, and that there are “insufficient social media governance policies in place to support social media activity.”

While recognizing social media as a critical tool for marketing and customer outreach, the CSA warns of the potential for an unintended breach of securities law obligations, particularly when dealing with prospective or forward-looking information not already in the public domain.

I hope that the more conservative stance of Canadian regulators towards social media does not freeze companies’ use of the platforms, but rather encourages companies to put in place the appropriate guidelines and oversight, as they do for all other outlets for communications. These governing practices should be communicated internally, to ensure that all corporate spokespeople are familiar with their obligations as a representative of a public company in the social media sphere. Fundamentally, a company should have designated spokespeople for online and offline communications, and they should observe the company’s disclosure policy in every communication. This is the approach I have taken with the communications programs I have led, and I am sharing the principles that I have implemented in the past.

Seven Rules for Social Media Activities – Speaking ‘On Behalf Of’ the Company

1. Follow the company’s Code of Conduct and Disclosure Policy. At the core of all communication engagements is our commitment to transparency, balanced information and equal treatment of all parties. All interaction should be in the spirit of our corporate values and principles, tailored to each respective audience.
2. Approval processes for publications and communication. All of the company’s communications have to be correct and consistent, and remain in line with our general standards for information. Principally, the same approval processes apply as with any other official communication and publications of the company. 
3. Mind copyrights and give credit to the owners. Always give credit to the original authors of any content that you are publishing (text, images, trademarks, video etc.) from a third party, and make sure that the company has the copyright or written approval for using said material.
4. Use special care if talking about company services or financial data.  Communication about the revenue, future plans, or the share price of the company as well as statements about our products (‘promotional information’) is reserved to experts in the field who have been trained for these responsibilities. If you need to provide information in these areas, refer to content available in the public domain (i.e. on the company website). 
5. Identify yourself as a representative of the company. If you are communicating on behalf of the company, you must always provide your full name and function. Make clear what your role is in the respective social media environment and refer to these guidelines or a specific set of rules when needed.
6. Monitor your relevant social media channels. Make sure that you know what is being discussed, so that you can respond when issues arise. Have rules in place to deal with potentially inappropriate or illegal content appearing in your sphere of responsibility.
7. Know and follow record management practices. The company has regulatory and legal obligations to retain certain information as records. Remember that online company statements can be held to the same legal standards as traditional media communications.

Chaya Cooperberg is Chief Communications Officer and Senior Vice President, Corporate Affairs at AmTrust Financial Services, Inc. in New York.