Company Tweets and Regulation FD: Material or Immaterial?

  

 Email Article  

Tweet  

  

  

  

  

Are companies complying with Regulation FD if they use push technologies such as Twitter and Facebook to announce material information?  Has Alan Meckler, CEO of WebMediaBrands (Nasdaq:WEBM), set a new precedence?

First, we researched whether or not the SEC has sent comment letters about Regulation FD and tweeting in the past 2 years.  We found an interesting tweeting scenario regarding WebMediaBrands' Chair and CEO, Alan Meckler.  We noticed an excellent blog post by Dominic Jones from IR report about Mr. Meckler’s tweeting as well.

In our own post, we will address whether or not the tweets contained material information based on the response issued by the company to SEC outlining their opinion.  Does the SEC’s regulatory silence mean Mr. Meckler set a new disclosure precedence for Regulation FD? Currently, Alan Meckler has over 2000 followers on Twitter who receive his updates versus the uncountable many who use company disclosures from SEC filings and press releases to make informed decisions.

 We found a comment letter dated January 7th, 2011 regarding Alan Meckler's social media activity that shared information about "future acquisitions, stock option purchases and new services" and whether this activity complied with Regulation FD.  WebMediaBrands Inc sent a response claiming that Alan Meckler's tweets do comply with current regulations as they do not uncover any "material non-public information."  The excerpt below best summarizes the response:

"[...]Mr. Meckler’s updates do not contain any material non-public information. Mr. Meckler discusses a wide variety of topics in his posted tweets, which fall into two broad categories, neither of which involve material non-public information. The first category covers Mr. Meckler’s personal opinions on topics completely unrelated to WMB or its operations[...]The second broad category of Mr. Meckler’s postings consists of topics that, to varying degrees, relate to WMB, its operations or its industry. These Company-related postings generally fall into three subcategories: (i) commentary on the industry in which WMB operates; (ii) previously released information about WMB; and (iii) announcements about WMB that are immaterial."

Here is a July 13th tweet that came before the company's August 10th earnings release and 8-K filing:

Here is his tweet dated August 3rd, to compare with the press release (link to release) that came out on August 4th:

An analysis of WebMediaBrands SEC filings and company press releases on its website, does not contain any guidance on the company’s performance, nor any filing or release which discusses company guidance (in order for the tweet to be considered Reg FD compliant, as per the companies comment letter response), where company related postings fall in 3 categories. (i) commentary on the industry in which WMB operates; (ii) previously released information about WMB; and (iii) announcements about WMB that are immaterial.

Based on the tweets above, does it mean sending such information as setting new revenue records before official press releases or SEC filings to 2000 followers is Regulation FD compliant? Either way, someone had to push the envelope - and kudos to Mr. Meckler for doing so!

To close this post, here are tweets released on the November 1^st.   They're about third quarter results posted on November 2nd: