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In late September, John blogged about the latest Regulation FD enforcement action, which arose out of the use of a social media account of the CEO of DraftKings to disseminate material non-public information about the company. This Freshfields blog has some timely reminders on Regulation FD in light of this enforcement action.

First, social media channels do not automatically constitute “broad dissemination” but may — if the company takes certain steps.

In its guidance from 2013, the SEC made clear that dissemination of information through social media (without more) does not constitute broad dissemination of this information.  Pursuant to that guidance, companies may disclose MNPI through social media channels only if sufficient steps were taken to alert investors and the market that such social medial channels will be used for the dissemination of MNPI. Methods of appropriate notice could be references to such social media channels in their periodic reports or press releases.

Second, prompt broad dissemination is appropriate when a company discovers an unintentional selective disclosure — although the initial disclosure may still be a Regulation FD violation.

Under Regulation FD, if a company unintentionally selectively discloses MNPI, it should remediate the violation by broadly disseminating the information “promptly.” For purposes of Regulation FD, promptly means “as soon as reasonably practicable (but in no event after the later of 24 hours or the commencement of the next day’s trading on the New York Stock Exchange) after a senior official of the issuer… learns that there has been a non-intentional disclosure by the issuer or person acting on behalf of the issuer of information that the senior official knows, or is reckless in not knowing, is both material and nonpublic.”

– Meredith Ervine