Canadian regulator highlights need for improved Social Media disclosure practice

The Canadian Securities Administrators (CSA) today released CSA Staff Notice 51-348 Staff’s Review of Social Media Used by Reporting Issuers, which summarizes staff’s findings and disclosure expectations for reporting issuers that use social media.

Staff reviewed the social media disclosure of 111 reporting issuers to determine if they were consistent with the principles of National Policy 51-201 Disclosure Standards and the requirements of National Instrument 51-102 Continuous Disclosure Obligations by providing balanced disclosure and ensuring that information is not selectively disclosed or misleading.

“Our review revealed concerns about how issuers are using social media websites, including specific instances where deficient social media disclosure may have resulted in material stock price movements and investor harm,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “We expect issuers to adhere to high-quality disclosure practices, regardless of the venue of disclosure, and encourage issuers to implement a strong social media governance policy.”

The review found that a significant number of issuers, or 77 per cent, had not developed a specific governance policy to direct their disclosure practices on social media websites.

As a result of the review, 30 per cent of issuers took action to improve their disclosure, including filing clarifying disclosure on SEDAR, removing social media disclosure and committing to improving disclosure and governance practices. The CSA statement is available here.