8 Steps You Should Take: Disclosure and the Internet

The Internet can add a wealth of convenience to our personal and business-related lives. Your company can easily share annual reports, company news and SEC filings online, and the investors can view it anytime they want to. While this is easy, there are dangers related to sharing this type of information on the Internet. The law regarding this type of communication hasn’t developed as quickly as the communication technologies, which means that there are new laws coming in to play pertaining to Internet usage. For your business, that could mean unexpected legal troubles when the law finally catches up.

How can you use the Internet to share information with your investors with fewer risks? You should always consult with a legal advisor. You can also implement these steps to reduce the risk for your company:

1. Have a Dedicated Monitoring Group: Setting up a group to review the proposed web content has a lot of advantages. They’ll be able to monitor what’s about to be published and what has already been published for accuracy. This type of safety check will be able to better ensure that posted content is accurate, complete and posted appropriately. This group should be able to work closely with the compliance officer to help assuage any of their doubts.
2. Stay Away From Analysts’ Reports: It may be tempting to post or even link to an analysts’ reports, but you should avoid doing this. Whenever you put any information on your company website, you are adopting that information. If those reports turn out to be misleading, your company may be liable for distributing false information to shareholders. If, on the other hand, you only share favorable reports, it can be considered selective disclosure.
3. Only Post Already Public Information: If you make it a rule that you only post data that has already been published through press releases or SEC filings, it will be less likely that you’ll publish something sensitive or incomplete. Also, it is good to stay in the habit of publishing information on the Internet and in other formats because, according to the SEC, disclosing information on the Internet does not meet disclosure obligations.
4. Avoid Forward-Looking Sentiment: Putting forward-looking statements online can create new risks for your business. This type of material would have to be updated very regularly in order to keep it accurate, and on large websites this type of page can be easily overlooked.
5. Date Material: You should include a prominent date on all of your published material, so the executive group will have an easier time monitoring the information. This will also give your readers a clear idea of when the information was published.
6. Update Promptly: The date will also help you keep all of your information up-to-date and fresh. Whenever information becomes inaccurate or misleading, you should take it off of your website.
7. Use Hyperlinks Wisely: You don’t want to litter your pages with hyperlinks. You could be liable for the information a reader finds after clicking on the link. To help reduce your liability, you should limit hyperlink use and include a disclaimer whenever a reader clicks on a link to another site. This disclaimer should let the reader know they are leaving your website.
8. Regulate Employees’ Internet Usage: You should prohibit company employees, or at least company executives, from participating in forums, chat rooms and similar venues in regard to company matters. The reason you should enforce this type of regulation is because anything an executive says in this type of environment can be credited to the company.

The Internet gives new possibilities and with them new risks. Make sure your company is prepared for using the Internet by working with a compliance officer and an attorney.

Legal Disclaimer

The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.