Earlier this month, the Canadian Securities Administrators (“CSA”) released Staff Notice 51-348Staff’s Review of Social Media Used by Reporting Issuers. It comes as a result of a review they conducted of social media use by 111 reporting issuers.

The CSA identified three key areas where they expect issuers to improve.

  1. The first is when selective or early disclosure is being made. This is when some investors receive material information through social media that other investors do not receive elsewhere, such as a press release.
  2. Another area is misleading and unbalanced social media disclosure. This is when information is not sufficient to provide a complete picture or is inconsistent with information already disclosed by the issuer.
  3. Finally, the last area is when insufficient social media governance policies are in place to support social media activity.

The CSA found that some social media posts resulted in material stock market movement, which could have resulted in harm to investors.

The CSA also indicated their continued monitoring of the social media posts of issuers.

Some of the key disclosure expectations provided by this staff notice, among others, are:

  • disclosing unfavourable news just as promptly as favourable news;
  • refraining from informing anyone of material non-public information before that information has been generally disclosed (posting to the issuer’s website alone does not constitute being generally disclosed); and
  • identifying any forward looking information, including any assumptions used to develop the information.

The CSA strongly encourages that issuers have rigorous policies governing their social media disclosure.

They recommend, among other items, that an issuer’s social media governance policy specify:

  • who can post information about the issuer on social media;
  • what type of sites (including personal social media accounts vs. corporate) can be used to post information;
  • what type of information about the issuer can be posted on social media;
  • what, if any, approvals are required before information can be posted;
  • who is responsible for monitoring the issuer’s social media accounts, including third-party postings about the issuer; and
  • what other guidelines and best practices are followed (for example, if employees posts about the issuer on a personal social media site, they should identify themselves as employees of the issuer).

Any issuer or prospective issuer should review its social media policies, including consulting a legal professional with assistance in reviewing or drafting such polices.