Want to Tweet to your followers soliciting an offer to buy a security? Or even simply to inquire whether they might want to buy a security? Once you’ve received pre-approval from your compliance team, how do you cram the statement required by SEC Rule 134(d) into an electronic communication platform that limits the number of characters to 140 or less?
You could add a link
Adding a hyperlink to your Tweet or text can conserve valuable communication real estate. But would adding a hyperlink to the required statements satisfy the Rule 134(b) or Rule 134(d) requirements?
Maybe. Recognizing the growing role communication technologies (like texting) and social media play (like Twitter) in communicating with security holders and potential investors, the Securities and Exchange Commission (SEC) says, its staff “will not object to the use of an active hyperlink” to satisfy the requirements of Rule 134(b) or Rule 134(d) in the following limited circumstances:[spacer height=”10px”]
What if someone else re-Tweets or reposts your message?
How would the SEC react when an issuer distributes an electronic communication compliant with Rule 134 or Rule 433 and that communication is retransmitted by a third party that is not an offering participant?
If you are the issuer and you are uninvolved in the third party’s re-transmission, the re-transmission would not be attributable to the you. “[W]hether information prepared and distributed by third parties that are not offering participants is attributable to an issuer or other offering participant depends upon whether the issuer or other offering participant has involved itself in the preparation of the information or explicitly or implicitly endorsed or approved the information.”
If you’ve done your part, the SEC says you are not responsible for that retransmission.
You are responsible for retaining your firm’s communications
The regulators emphasize you are responsible for tracking your firm’s communications – including those texts, and those Tweets, and any other postings on other social media platforms. You are responsible for ensuring every communication is compliant and, equally important, that you can locate those communications when the regulators request them.
All of which simply underscores the importance of retaining records regardless of the communications platform, and being able to retrieve them on demand. Put processes and procedures in place now.
You can do it yourself. Or, you can connect with an independent regulatory archival and compliance solutions specialist like us. Patrina. Ask about our comprehensive regulatory archival and compliance solutions specifically designed for Broker/Dealers, RIAs, and FCMs.
Let’s talk (212- 233-1155).