Twitter announced last week that it has confidentially submitted its IPO registration statement to the SEC to begin the review process. Confidential submissions have been permitted by the JOBS Act for a while now, so it’s no surprise that Twitter would utilize that option. What’s newsworthy, as has been widely reported, is that Twitter announced the submission in a Tweet:
“We’ve confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale.”
In addition to being extremely effective marketing by Twitter, this is interesting from a couple of angles.
First, it highlights the rapidly expanding use of social media by public (or soon to be public) companies. It’s a phenomenon I’ve written about before (see Social Media and Reg FD: What Just Happened (and What Didn’t), as well as A Social Media Update) and will again, no doubt. Companies are becoming more and more creative and comfortable with different forms of communication, even in tightly regulated areas of disclosure (see Video Earnings Calls—A New Twist on an Old Practice). If you aren’t already thinking about where social media fit in your communications spectrum, it’s time to do so.
Second, a Ben Franklin quote seems apropos to this situation: “Moderation in all things—including moderation.” In this case, Twitter wisely involved its lawyers before Tweeting. The lawyers apparently advised the company that such pre-offering communications, no matter the medium, are subject to Rule 135 of the Securities Act, which imposes certain restrictions and requirements. That explains the second sentence of the Tweet, which is lifted directly from Rule 135.
The result was a creative, effective use of social media within the bounds of applicable legal requirements. That kind of internal communication and coordination between marketing and legal is how disclosure controls are supposed to work.
Of course, it’s one thing to get it right during an IPO when everyone is laser focused on such matters. The real challenge is making it work day-to-day.