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.
Friday, April 16, 2010
Monday, April 5, 2010
More Legal Guidance for Social Media
Updates on my prior post about Social Media and the law...
Above all else, the smartest social media policy is to make sure that any posting is checked by someone else.
Above all else, the smartest social media policy is to make sure that any posting is checked by someone else.
Control/Accountability for Content
How you use a medium is important. Your use on a particular medium is discoverable, so do not use your personal accounts for business. (Discoverable means records can be subpoenaed by the other side, and you can be questioned about it in a confrontational meeting called a deposition). You do not want your personal social media activity subpoenaed. If you are an entrepreneur, have a separate account for business.
Employment Law
Generally with company computers taken home, and personal mobile devices used at work it is controlled by the company, and you can be disciplined for what you write.
When hiring, there could be records retention issues in where you do your research on job candidates. This could include popular career networking sites. You may come across slanderous material about someone on an internet search.
Libel
One possible trend is by asserting yourself online as a businessperson, you might be lose some privacy and defamation protections. An opinion or a documented fact is generally not actionable for defamation, so cite your sources.
Privacy to a particular thing is lost when you say it in public.
In addition to libel, watch out for suits to business reputation, suits for interference with business opportunity, and suits for interference with contractual relations.
Copyright
When posting online photographs or video, generally if the scene is out in public, it is fair to post. Do not post another’s art unless it is a critique. With podcasting, if you want music or the spoken words of another, get permission from whoever has the copyright. You can use snippets of music if you are critiquing it.
Do not pretend to be someone else. They can sue you for trademark infringement, and/for privacy actions.
Tuesday, March 2, 2010
8 Steps to Contract Negotiations
Here are 8 points to refer to when negotiating a contract or lease. If all eight are not met, negotiate harder....
1. Define the duties and standards of performance. In other words, explicitly write down every thing each side has to do. Not only what to do, but how well it needs to be done.
2. Define ambiguities, terms, and foreseeable issues. Every business has jargon, special terms, and technical terms. Everything should be clear to both sides. If there is an issue that could come up, define it and the contingency plans. This is what makes contracts so wordy.
3. Define the context, inherent risk, and the assumptions of the contract. Risky businesses need a lot of assumptions and calculations. Make sure that both sides understand the nature of the business and how risky it is.
4. Clearly set out the pricing structure. Spell out how much money is due, and when it is due.
5. Define control and property rights. This is the proverbial baby in the bathwater. This is the cash cow. My be it is a house, the right to live in a house, the right to make money off of a book, or any other set of rights. In addition to the right to money, define the right to have final authority over the property.
6. Write duration, termination, and business succession clauses. When and how either of you can get out of this arrangement must be understood.
7. Set forth the process to resolve controversies. A contract or lease is a legal document, meaning it can be enforced in court. You must have a plan for arbitration and litigation. An important part is whether it will be decided in DC, or elsewhere.
8. Make sure each party acknowledges in writing that they understand the seven points above.
Those are the basics. If the stakes are big or you are dealing with a professional, have your own professional look over a draft for you. Lastly, anytime you are given a contract to sign, it is written in favor of the person who gave it to you.
1. Define the duties and standards of performance. In other words, explicitly write down every thing each side has to do. Not only what to do, but how well it needs to be done.
2. Define ambiguities, terms, and foreseeable issues. Every business has jargon, special terms, and technical terms. Everything should be clear to both sides. If there is an issue that could come up, define it and the contingency plans. This is what makes contracts so wordy.
3. Define the context, inherent risk, and the assumptions of the contract. Risky businesses need a lot of assumptions and calculations. Make sure that both sides understand the nature of the business and how risky it is.
4. Clearly set out the pricing structure. Spell out how much money is due, and when it is due.
5. Define control and property rights. This is the proverbial baby in the bathwater. This is the cash cow. My be it is a house, the right to live in a house, the right to make money off of a book, or any other set of rights. In addition to the right to money, define the right to have final authority over the property.
6. Write duration, termination, and business succession clauses. When and how either of you can get out of this arrangement must be understood.
7. Set forth the process to resolve controversies. A contract or lease is a legal document, meaning it can be enforced in court. You must have a plan for arbitration and litigation. An important part is whether it will be decided in DC, or elsewhere.
8. Make sure each party acknowledges in writing that they understand the seven points above.
Those are the basics. If the stakes are big or you are dealing with a professional, have your own professional look over a draft for you. Lastly, anytime you are given a contract to sign, it is written in favor of the person who gave it to you.
Ten Rules for Social Media
If your company uses social media, consider these regulations to comply with the law.
1. Thou shall not plant false testimonials about your products and services.
2. Thou shall not mislead consumers as to the qualities and prices of the products and services you sell; evidence shall set you free.
3. Thou shall not release information designed to harm a market.
4. Licensed professionals shall not give advice that is individual in nature.
5. Thou shall not engage in illegal promotion schemes, and take care to adhere in interstate and international laws.
6. Thou shall not mislead investors and shareholders as to internal and external risks to your company.
7.Thou shall not publicize any sale of equity or control of the company.
8. Thou shall not release trade secrets.
9. Thou shall not post the copyrighted, trademarked, or patented material of another.
10. Thou shall not defame.
Basically educate your management and employees about law and online social media. Remember the speed with which online posting can be spread...and taken out of context.
1. Thou shall not plant false testimonials about your products and services.
2. Thou shall not mislead consumers as to the qualities and prices of the products and services you sell; evidence shall set you free.
3. Thou shall not release information designed to harm a market.
4. Licensed professionals shall not give advice that is individual in nature.
5. Thou shall not engage in illegal promotion schemes, and take care to adhere in interstate and international laws.
6. Thou shall not mislead investors and shareholders as to internal and external risks to your company.
7.Thou shall not publicize any sale of equity or control of the company.
8. Thou shall not release trade secrets.
9. Thou shall not post the copyrighted, trademarked, or patented material of another.
10. Thou shall not defame.
Basically educate your management and employees about law and online social media. Remember the speed with which online posting can be spread...and taken out of context.
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