April 22, 2010

Forward-Looking Disclaimers: Mattel Has Real Style!

If there were awards given for entertainment value of disclaimers, I imagine this forward-looking information disclaimer for Mattel’s new interactive 2009 Annual Report (you’ll need to click on “Start”) would win hands-down this year (last year’s winner would be Southwest’s “rap” disclaimer). It’s innovative as two children read the disclaimer at the beginning of the video. After reading – and writing – so many staid disclaimers over the years, it’s cute as buttons.

On the one hand, due to its high entertainment value, I bet a court would give this disclaimer more weight than written disclaimers because shareholders are much more likely to pay attention to it. But on the other, it’s also possible that a court may be turned off by children reading the disclaimer for fear that investors wouldn’t take it seriously.

As noted in the memos posted in our “Forward-Looking Information” Practice Area, courts seem to prefer that the cautionary language be tailored to the forward-looking language in the document. But that just applies when the forward-looking information is in a written document.

In this case, it’s a video and arguably it’s considered an “oral” statement – in which case, the requisite disclaimer is much more bare-bones and need not be tailored (just like Mattel has it). I’m not sure if a court would consider a video “oral.” Note that under Reg G, a webcast is considered “oral” – but other provisions of the securities laws could lead one to conclude that all multimedia are “writings” (see these FAQs I drafted long ago). All interesting stuff to ponder.

I should note my general thoughts that video annual reports that come off solely as infomercials are a waste of time (read how to create effective video annual reports in my piece entitled “The Birth of “Video Annual Reports:” A Substitute for the Written Word?” from the Winter ’09 issue of, a free publication).

Dominic Jones agrees, and adds: “I’d much prefer a cheaply made video featuring a one-on-one between an analyst and the CEO, or even just the CEO being asked a bunch of questions sourced from shareholders via the company’s website. Keep it real and authentic.”

Social Media and Investor Relations

A while back, Brian Lane and I taped a 45-minute podcast for Eric Schwartzman’s “On the Record” regarding the impact of social media on investor relations, which a heavy dose of the legal implications – which obviously means a bit of discussion about Regulation FD.

The podcast is designed for the general public, so the remarks fall at a fairly high level. I If you scroll down this page, Eric does a good job of sifting through the audio and creating a detailed table of contents of the program’s agenda by summarizing certain remarks in bullet-format, indicating the “minute mark” during which they were made.

This “Fortune 500 Business Blogging Wiki” shows that 15.6% of the Fortune 500 are blogging – the Wiki has links to the 78 business blogs. In his “IR Web Report” yesterday, Dominic Jones blogged about how investor relations officers can no longer ignore social media compliance risks.

FINRA Provides Guidance on Use of Social Media

A while back, FINRA provided guidance – in Notice 10-06 – regarding how the rules governing communications with the public apply to social media that are sponsored by members or their registered representatives.

– Broc Romanek