CSA review highlights risks of social media disclosure

The Canadian Securities Administrators (CSA) has published CSA Staff Notice 51-348, which summarizes findings and disclosure expectations for reporting issuers that use social media.

The review found that 72% of issuers actively use at least one social media website, but 77% have no specific governance policy to direct their disclosure practices on those sites.

Social media posts identified by the review included disclosing forward-looking information, untrue financial information and unbalanced (only favourable) information.

“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,” says Louis Morisset, CSA chair and president and CEO of the Autorité des marchés financiers, in a release. “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.”

As a result of the review, 30% of issuers improved or corrected disclosure, including the filing of clarifying disclosure on SEDAR, removing social media disclosure and committing to improve disclosure and governance practices.

About the review

Staff reviewed the social media disclosure of 111 reporting issuers in Alberta, Ontario and Quebec 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.

These were non–investment fund reporting issuers, and websites reviewed included Facebook, Twitter, YouTube, LinkedIn, Instagram and GooglePlus.

Read the full staff notice here.

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.