On 21 April 2014, the Staff of the Division of Corporation Finance of the SEC (the "Staff") released guidance to facilitate the use of social media for certain communications in registered securities offerings.
Recognising the interest in using technologies such as social media to communicate with security holders and potential investors, this guidance permits offering participants to use Twitter or other similar social media with character limitations to issue Rule 134 offering announcements and Rule 433 free writing prospectuses with respect to registered securities offerings.
Under the new SEC Staff guidance, offering participants are permitted to electronically communicate Rule 134 announcements and Rule 433 free writing prospectuses if:
- the electronic communication is distributed through a platform that has technological limitations on the number of characters or amount of text that may be included in the communication (e.g., Twitter);
- including the required statements in their entirety, together with the other information, the communication would exceed the limit on the number of characters or amount of text; and
- the communication contains an active hyperlink to the required statements and prominently conveys, through introductory language or otherwise, that important or required information is provided through the hyperlink.
The Staff also addressed the situation where an issuer distributes an electronic communication in compliance with Rule 134 or Rule 433 under the Securities Act of 1933 and a third party that is not an offering participant re-transmits that communication. This may arise in the context of some electronic communication platforms, such as those made available through certain social media websites, that permit users to re-transmit a posting or message they receive from another party. The Staff clarified its position that if the third party is neither an offering participant nor acting on behalf of the issuer or an offering participant and the issuer has no involvement in the third party's re-transmission beyond having initially prepared and distributed the communication in compliance with either Rule 134 or Rule 433, the re-transmission would not be attributable to the issuer.
The guidelines are available at:
http://www.sec.gov/divisions/corpfin/guidance/securitiesactrules-interps.htm#110-01
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