In October, 2015, short-sellers attacked three Canadian public companies: Valeant Pharmaceuticals International, Inc., DH Corporation and Nobilis Health Corp. All three companies refuted the short sellers’ allegations in traditional media. We suggest below that these companies could have also used social media to get their side of the story out. In our view, there was a potential opportunity to further influence market sentiment about allegations that had already negatively impacted secondary market trading.[1]


Nobilis Health: On October 9, a pseudonymous blogger accused Nobilis Health of dubious marketing practices and heavy insider selling.[2] The company’s stock lost 27% of its value that day. Four days later, Nobilis Health refuted the allegations, and used social media to get its message out.[3]

Valeant: On October 21, Valeant’s stock plunged as much as 33% after short-seller Citron Research published a report accusing Valeant of accounting irregularities.[4]  Citron tweeted about its report on four different occasions to its 24,800 followers.[5] Valeant’s immediate response included a news release[6] followed by a 75-minute conference call with investors to address Citron’s allegations.[7] Citron’s allegations and Valeant’s response trended on twitter with the hashtags #Valeant and #VRX. Valeant itself was not directly part of the discussion on social media.

DH Corporation: On October 27, DH Corporation was accused by short-seller Lawton Park Capital Management of making “desperate” acquisitions and playing “accounting games” in order to “obfuscate deteriorating performance,” sending DH Corporation’s stock down 17%.[8] The Lawton Park report was only distributed to subscribers of, a website catering to hedge fund, mutual fund, and private equity professionals, but was widely referenced in traditional and social media. DH Corporation responded by releasing its quarterly financial results early and holding its investor call early.[9] DH Corporation did not respond to the allegations on social media platforms.

Social Media can influence the marketplace

Social media impacts the financial markets. A 2014 survey reported that 70% of nearly 500 institutional investors and sell-side analysts surveyed said that digital media will have a greater impact in future investment recommendations and decisions. There are already automated strategies that trade on market sentiment captured from social media.[10]

Twitter recently partnered with Bloomberg.[11] Twitter’s VP of Data, Chris Moody, described this deal as follows:

Our agreement with Bloomberg highlights the growing importance of Twitter in driving investment and trading decisions. Increased access to this information through the Bloomberg Professional service will continue to accelerate as the adoption of Twitter data through the financial services community grows in importance.[12]

In addition, there are numerous examples of social media platforms enabling companies to increase their engagement with, and amongst, retail investors and persons who would not likely access traditional news wire services for information.

Because of social media’s wide reach and lack of vetting, it is imperative that companies consider engaging in the dialogue in order to provide an alternative viewpoint and to counterbalance the conversation.

Social Media as a Crisis Management Tool

Neither Valeant nor DH Corporation leveraged social media to respond to the allegations against them. And Nobilis Health’s response on social media came 4 days after the allegations broke. Here are two key takeaways for companies:

  1. Maintain a Social Media Presence

Companies without a social media presence are missing an important opportunity to influence and potentially change the dialogue when crises emerge. Platforms like Thomson Reuters’ Social Media Monitor track and aggregate the positive, neutral and negative tweets on a company to generate a “sentiment score”. The sentiment score is influenced, in part, by the social media presence of the person or persons commenting on a particular company. A stronger social media presence by a public issuer could significantly impact its sentiment score on a particular issue.

For instance, Valeant’s social media sentiment score turned more negative after the company held its 75-minute conference call with investors and analysts to refute Citron’s allegations.[13] Reuters reported that among trending hashtags associated with Valeant after the investor call were #enron and #fraud.[14] Active participation by the company across social media would have been an opportunity to impact that negative sentiment score.

  1. Integrate Social Media in Crisis Management Plan

Companies should integrate social media into their existing crisis management plan. When a company is attacked, investors and analysts will look for an immediate response. Of course, an immediate substantive response is not always possible without fully investigating the allegations. In the interim, and in a timely manner, social media (and traditional media) can be used to acknowledge the situation and commit to a full investigation.

For example, in DH Corporation’s case, the company put out a press release stating:

[The Lawton Park Capital Management] report contains numerous inaccurate, unsubstantiated and misleading statements, assertions and speculations. D+H recommends that investors review its public filings as providing accurate information regarding the Company and its performance, and not to rely on this report which contains misrepresentations and which may have purposes other than giving investors accurate information and impartial analysis.[15]

Such a statement could have then been released shortly thereafter on various social media platforms provided the right polices were in place and always keeping in mind securities law policies with respect to “generally disclosing” material information (as discussed in one of our earlier articles).


Companies should consider including social media considerations in its crisis management policy. The policy should include an anticipated message, the communication strategy on traditional media and social media, the timing of the delivery of that message after a crisis breaks, and other legal considerations. Public companies should obtain legal advice regarding the use of social media for crisis management. We have previously outlined some of the legal considerations applicable to using social media to communicate with investors.