Banking Law

Corporate "Tweeters" are a new breed of marketer. Sometimes, being cutting edge is double-edged. A recent Wall Street Journal article demonstrates how being tech-savvy doesn't mean that you're necessarily compliance-savvy.

An eBay Inc. effort to broaden communication through the popular Twitter Web-messaging service highlights the hurdles facing corporate users of online social media.

The online auctioneer launched a corporate blog in April 2008. Two months later, blogger Richard Brewer-Hay began "tweeting" -- posting updates on Twitter -- about Silicon Valley technology conferences, eBay's quarterly earnings calls and other topics.

The growing Twitter audience also attracted the attention of eBay's lawyers, who last month required Mr. Brewer-Hay to include regulatory disclaimers with certain posts. Some followers think the tougher oversight is squelching Mr. Brewer-Hay's spontaneous, informal style.

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Blogs and tweets can run afoul of Securities and Exchange Commission regulations on corporate communications. But sanitizing such posts risks hurting credibility with online audiences.

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Corporate lawyers say companies should devise a social-media policy before adopting blogs or Twitter. "All of the traditional ways that a company can get in trouble for making public statements" apply to the Web, says Lisa Wood, of Foley Hoag LLP.

She urges companies to include the standard disclaimers they use in other communications, as Mr. Brewer-Hay now does. Ms. Wood says companies shouldn't disclose financial information on Twitter that isn't available elsewhere, and should make clear that opinions expressed by others in company-sponsored forums -- like comments on blogs -- don't represent management's views.

It's obvious that we're all feeling our way along with this new social media marketing "stuff." It's a balancing act, with marketing folks worried that the damn lawyers are going to put a stopper in the magic bottle and lawyers breaking out in flop sweat over the immediacy of the communication and the relative lack of control over the conversations that are generated. That said, I think a lot of the risk is either overblown or, where it's real, can be effectively managed. From the number of financial institutions, large and small, I see on Twitter these days, banks better come to grips with the management of those risks. If not, they'll either be shut out or shot down.