TheCorporateCounsel.net

Responding to Rumors: GE’s New Blog

Recently, General Electric launched a new blog – GEReports.com – that is creating quite a stir. As part of this effort, a companion YouTube channel was launched.

Launched by GE’s Communications team, GE intends for the blog to be a way of providing investors with additional information, not to replace other modes of disclosure. I really applaud GE’s efforts – and in talking to my in-house colleagues, it seems to have done the trick in opening other company’s eyes to the potential of blogging. Between this new blog and Dell’s IR blog – which is now over a year old – IROs and communications officers can get a good idea about the types of topics that are fodder for blogging.

The only thing I get worried about is that GE seems like it’s using its blog to respond to rumors. For example, GE has used the blog to say it’s not seeking equity investments from sovereign wealth funds and that it will not cut the dividend through the end of ’09.

Most companies have a policy against responding to rumors to avoid any duty to update – and because if you do respond to rumors and then say “no comment” to one, folks will assume the rumor is true because otherwise you would have denied it! However, with rumors being used by short-sellers to drive down stock prices these days, it may be time for companies to rethink those “don’t respond to rumor” policies.

I can’t help but note the insipid quote from a Professor in this Reuters article that wonders if the information in GE’s blog will be valid or whether the blog is part of an “agenda.”

The purpose of blogging is to build trust, so it would be silly for GE to post inaccurate information (not to mention the basis for potential litigation). And yes, GE has an “agenda” – to inform shareholders, which in turn will build trust and support the stock price.

A Special LinkedIn Request

To help me fulfill one of my New Years’ resolutions, if you’re on LinkedIn, please become one of my “networking friends.” To do so, just email me and I’ll invite you – or just “invite me” thru my LinkedIn profile. The first ten to invite me today get their names in the blog tomorrow if they want (if you don’t want that, no big deal – I’ll label you as an anonymous donor). And if you’re a SEC alumni, feel free to join this new group, “SEC Staff Alumni.”

If you’re not on LinkedIn but curious about what it is, you can email me and I’ll explain. But the gist is that it’s not like Facebook (which is more of a social site with plenty of inane chatter) – rather, LinkedIn is filled with professionals. So far, there is not much activity on LinkedIn other than folks asking each other to be “connected.” But that typically is the groundwork for some serious networking that may take place later. I really can’t see any harm in placing yourself up there, even if you don’t intend to ever use it (because someday you may change your mind and you’ll already have gathered some networking contacts through the site). The key is LinkedIn will not require you to spend time maintaining your page, etc.

Twitter, Yammer? What Does This Mean For Me?

More and more is being written about Twitter. Called a “microblog,” Twitter allows one to send a message up to 140 characters (roughly a short sentence) to all those that “follow” the person sending the message. So far, it’s mainly being used in the business world by journalists to get leads on potential stories – so corporate communications clearly should be using this tool.

But it’s starting to be used elsewhere in the business world. For example, a GE spokesperson used Twitter to respond to a question about its promise to not cut its dividend (scroll down here to find this reply)- so it’s importance for investor relations officers is growing. And the SEC has been using Twitter as a way to push out its press releases, etc. for some time.

Now, I’ve had my own Twitter Feed for well over a year (my personal one is much older than this business one) – but I only recently began to use it on a daily basis. So far, I haven’t seen a dramatic change in my life, but I will let you know. For those of you on Twitter, please follow me to get all the latest.

In his “Delaware Litigation” Blog, Francis Pileggi recently explained why business litigation lawyers might consider Twitter. And in his “Securities Docket,” Bruce Carton provides a running list of Twitter Feeds for securities counsel.

And if the pace of change doesn’t frustrate you enough already, consider that a new service – Yammer – is already being touted as the “new Twitter.”

FINRA Proposes Rule on Rumor Circulation

A few weeks ago, FINSA proposed a rule relating to the circulation of rumors. The proposed rule is based on FINRA Rule 6140 and NYSE Rule 435(5). We have posted memos on this proposal in our “Securities Enforcement” Practice Area.

– Broc Romanek