Social Media Spin

We all know that trans­parency is one of the virtues of social media. But what hap­pens when a com­pany, actively engaged online with its cus­tomers and investors, reveals too much, pos­si­bly com­pro­mis­ing its pri­mary oblig­a­tions to the pub­lic and fed­eral regulators?

Yes­ter­day, Social|Median CEO Jason Gold­berg “decided to let [his] fol­low­ers know on twit­ter that there might be an oppor­tu­nity to invest.” Gold­berg announced via Twit­ter Wednes­day morn­ing that Social|Median is “rais­ing some more angel invest­ment now. $25k — $100k/​investor, up to $500k. Inter­ested par­ties can con­tact me directly.”

Goldberg’s announce­ment set off a flurry of con­ver­sa­tion and con­tro­versy. Michael Arring­ton on TechCrunch said the tweet “dis­re­gards 60 years of secu­ri­ties reg­u­la­tions” and vio­lates numer­ous laws, but adds that enforce­ment is unlikely. Arring­ton is not a secu­ri­ties lawyer, but does have some expe­ri­ence in the world of start-​​up investment.

The dis­cus­sion on Friend­Feed and TechCrunch con­tin­ues to grow. Gold­berg deleted the tweet say­ing it “Wasn’t worth the TechCrunch headache.” The screen­shot first cap­tured by Michael Arring­ton is all
over the blogosphere.

Social|Median on Twitter

The idea that a com­mu­niqué like this could be “reversed” by delet­ing it, espe­cially one broad­cast via web 2.0, is prob­a­bly a lit­tle naïve. This is one of the issues the SEC — which recently relaxed the rules on finan­cial report­ing, allow­ing com­pa­nies to post finan­cial results to their web sites in lieu of more tra­di­tional and expen­sive report­ing meth­ods — will have to grap­ple with. It is unlikely, how­ever, the SEC will allow “cor­po­rate do-​​overs” like delet­ing an already pub­lished mes­sage that the com­mis­sion feels was in vio­la­tion, though it may tem­per their pros­e­cu­tion of an offender.

Social|Median took a chance and used social media as a way to con­nect with poten­tial investors, but may have over­looked its account­abil­ity to cur­rent investors and SEC reg­u­la­tors. Gold­berg says he was using Twit­ter to reach his exist­ing investor com­mu­nity, and that he was not mak­ing a pub­lic offer­ing. Unfor­tu­nately, Twit­ter updates are vis­i­ble to the pub­lic, so this strat­egy back­fired, and as Gold­berg com­mented, reac­tions to his announce­ment have been a “headache”.

When it comes to sen­si­tive mat­ters like invest­ment and finan­cial dis­clo­sure, how can you avoid your own social media headaches?

• Play By The Rules — Famil­iar­ize your­self with SEC finan­cial
  dis­clo­sure reg­u­la­tions. A cou­ple of resources for this are here and here
• Be Strate­gic — Your cor­po­rate social media strat­egy should include train­ing and clearly stated poli­cies on finan­cial reporitng
• Social Media Isn’t a Get Out of Jail Free Card — Just because you’re on Twit­ter, Face­book or IM, don’t act as if the usual rules don’t apply
• Take Intel­li­gent Risks — There are oppor­tu­ni­ties to take advan­tage of social media to court investors in some cases. This just wasn’t one of them

I’d love to hear your ideas on the role of social media in investor rela­tions. This is a fast mov­ing, inter­est­ing field and we def­i­nitely want to be cur­rent when Social­Corp pub­lishes later this year.

Posted by Ghen­nipher this morn­ing to the Social Corp blog