A Few Rules of Thumb About Press Releases

Like public reports filed with the SEC, press releases can draw the attention of regulators and the plaintiffs’ bar. Treat social media posts with the same caution as SEC filings and formal press releases, as regulators, plaintiffs’ lawyers and investors are paying attention. This is a particular vulnerability for public companies. Unlike formal communications such as press releases, the personal social media account of a public company officer may not always be subject to company disclosure controls and procedures.

It is important to portray confidence to the market, although it is advisable to avoid being definitive. If the events described in press releases fail to occur, an issuer is potentially susceptible to securities fraud claims. The dissemination of material information by press releases may be a regulatory requirement for exchange-listed issuers. Public company officers responsible for the disclosure of material information should abide by this rule: “Does this information make me want to buy or sell the company’s stock?” If the answer is yes, then bring other officers and outside counsel into the conversation.

After the initial excitement of making an important announcement, the issuer’s diligence doesn’t end. General counsel should be mindful of the content of previous social media posts and press releases and, if they require correction, should update or even retract them. This will help ensure that issuers get the positive kind of attention they want or at least avoid negative attention from regulators and plaintiffs’ lawyers.