Last year, the Securities and Exchange Commission (SEC) issued a report stating companies could use social media such as Facebook and Twitter to announce key news and information in compliance with Regulation Fair Disclosure (Reg FD)—so long as investors are informed in advance which services will be used to disseminate information. The Federal Financial Institutions Examination Council (FFEIC) later released its own guidance to financial institutions on crafting their social media programs and managing risk in the social media landscape.
Social media presents an enormous—and unique—opportunity for community banks when it comes to shareholder communications as many community bank shareholders are also depositors or have a lending relationship with the bank. This opportunity will only grow as older, baby boomer depositors are replaced by technology savvy, young customers who seek to connect with their financial institutions in new ways.
Yet, sharing material news and financial information on social media is not without its pitfalls. In this article, we outline some of the Dos and Don’ts if your company is considering incorporating social media into your shareholder communications program.
- Do disclose to shareholders which social media channels you will use to share news and other material information. A good place to do this is in your annual report or on the investor relations section of your website. Check out the investor relations page on OTC Markets Group’s website for an example.
- Do use social media to share more than just your corporate and financial news. Include photos and links to video broadcasts from investor conferences, links to industry news and media coverage as well as analyst reports and trade information.
- Do proactively engage your followers with direct questions to stimulate discussions. Consider soliciting questions from investors during shareholder conference calls or annual meetings to let them know you’re listening.
- Do use active shortened hyperlinks (using an online service such as Bitly) to link to press releases and other documents that can’t be included in full social media posts (e.g. Twitter is limited to 140 characters). The SEC stated earlier this year that if a communication is limited by the number of characters or amount of text that can be included, an “active hyperlink” will satisfy Reg FD compliance rules.
- Do include your “cashtag”; the dollar sign and your stock symbol (ex. $OTCM) in tweets, so investors can easily track conversations about your stock in Twitter.
- Do consider a social media management tool like Hootsuite to manage your social accounts, schedule messages and measure the return on investment of your social programs.
- Don’t restrict access to your company’s social media site. Disclosing material information on a password-protected or otherwise restricted website will likely not be considered Reg FD compliant.
- Don’t share only positive news. Best practice in investor relations is to share your good news as well as your bad. If you share your earnings results on Twitter, don’t only share your results when they’re positive. The same with analyst reports. Don’t only share your upgrades.
- Don’t ignore social media altogether. With so many new technologies to consider, it may be tempting for community bank boards and management teams to stick their heads in the sand. But they do that at their peril. The motto for social media is the same for traditional media: if you don’t own the conversation, it will own you. So, even if your bank isn’t using social media to engage with shareholders, create social media accounts so you can monitor what is being said about your company, your peers and the industry.
If you’re still stumped on how to start, check out some of your larger public banking peers who are proficient on social media such as JP Morgan Chase ($JPM) and Bank of America ($BAC). Happy tweeting!