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 communique like this could be “reversed” by deleting it, especially one broadcast via web 2.0, is probably a little naive. 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