If your company uses social media to do marketing, customer relations, or for any other purpose, those employees who do the posting must be aware of some basic pitfalls with securities laws. These legal minefields, like Regulation D, are very easy to violate in casual conversation. Online social media records casual conversations so a misstatement can be costly to your company.
1. Understand that your written language can come back to bite you in a lawsuit from an angry investor or an angry vendor. On Twitter, Facebook, etc, avoid misleading statements and puffery when writing about your company.
2. Do not announce that you are looking for financing. You are violating securities laws for private placements as well as cluing in your competition as to your financial status and planning.
3. Even with a sanctioned public offering, avoid conversations in an open online forum. You may very well have to report it all to the SEC, so it is not a good idea.
4. Stock offerings to employees ought not be discussed in an open online forum. It is one more matter to monitor, and again, it could give competitors insight into your company's compensation model.
P.S. Earlier posts on this blog mention other legal pitfalls on social media.
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