Florida investors often turn to a stockbroker, financial adviser or brokerage firm for advice about investment opportunities in a wide range of securities, such as a new startup company, a fixed-income product, an initial public offering, or a mutual fund.
In a technology age, such advice might be delivered in many forms. Some investors might set up stock quotes on their smartphones. Others might access financial websites with Wi-Fi enabled devices, such as tablets or iPads. Perhaps it is not surprising, then, that the U.S. Securities and Exchange Commission recently approved the dissemination of corporate news on blogs and certain social media sites, including Facebook and Twitter.
However, a heightened duty applies to information disclosed on social media. Before releasing information, companies must notify their shareholders about which specific social media sites they will be using. The rationale behind the rule is to provide all investors with an equal opportunity to access the information — and at the same time.
Florida readers may already know that public companies generally have a duty to disclose material information to the public. That obligation applies regardless of the type of public security involved, whether it is a fixed-income product, a new startup, an initial public offering, a mutual fund, or some other type of public investment product.
In the same vein, stockbrokers, financial advisers and brokerage firms have a fiduciary duty to accurately represent material information about securities to their clients. That duty applies to all advice offered to clients, whether it be about public or private securities. If the duty is breached, clients may have a potential claim of securities fraud against an adviser who misrepresented or failed to adequately disclose material information.
Source: nbcmiami.com, “SEC Clears Social Media for Company Announcements,” Cathy Rainone, April 3, 2013
