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Feature

George A. Stamboulidis, Managing Partner
Alberto Rodriguez, Associate
Baker Hostetler

Think Before You Tweet
What every corporate executive should consider before using Twitter.

By George A. Stamboulidis and Alberto Rodriguez

It seems as though the whole world is abuzz, or shall we say “a-tweet,” about the potential commercial applications for Twitter — the website that encourages individuals and businesses to post messages, known as “tweets,” of 140 characters or less for the world to see.

Companies who have adopted Twitter, such as JetBlue, Dell, Pepsi, Home Depot and Bank of America have been harnessing the power of Twitter to engage customers in a number of different ways — from answering their questions to sending out alerts on products, services, and special offers. These companies literally have thousands of individuals constantly receiving their messages and are, conversely, actively monitoring Twitter for tweets relating to their products and services.

A bit surprisingly, CEOs and other top corporate executives have also been using Twitter as a means to engage customers, promote their companies, and as a forum for just about any topic of their daily life. Click here for Douglas MacMillan and Rebecca Reisner’s Business Week article, “CEOs Who Twitter.”

Richard Branson's Twitter Café
In fact, Twitter encourages business users to think about their “Twitter account as a friendly information booth or coffee bar” — see http://business.twitter.com/twitter101/starting. For example, Virgin Group Chairman Richard Branson says that Twitter helps him communicate what he does during his days which are filled with service launches, product announcements, parties, events, and consumer opportunities.

While most of Mr. Branson’s tweets are seemingly benign advertisements for his companies (e.g., “Take a look at the new … community portal for the Virgin Group” and “Virgin America wins Best US Airline 2 yrs in a row!”), Mr. Branson also mixes his business messages with a bit of personal flair and politics — among other more audacious tweets. One of his recent tweets says: “Arianna Huffington and I chatting on Virgin America's inaugural flight to OC. Have put my trousers back on.” Another tweet mentions his criticisms of a competitive business venture he calls a “monster monopoly” (“I've written to President Obama about the BA/AA monster monopoly in the making…”) and has even tweeted the start of his “three day fast to support the people of Darfur.”

As you can see from a selection of Mr. Branson’s tweets, they are infused with everything from business promotion and strategy to his personal style, politics, and humor. Such tweets can make for an entertaining read. From a legal perspective, however, such a mixed bag of messages coming from a top corporate officer raises several issues for a both private and public companies.

How You Can Run Afoul
If not properly monitored, CEOs and other senior officers run the risk of violating insider trading laws by sharing sensitive nonpublic information. Also, disseminating alleged falsehoods or disparaging remarks about competitors could give rise to libel suits, and sending out false or misleading claims may pave the way for fraud actions.

As with press releases, there is almost no end to the type of regulations one can run afoul of by sending out a mass message to the public.

Corporate executives should therefore, at the very least, implement five basic “Do’s and Don’ts” to minimize legal risks posed by tweeting and to maximize Twitter’s commercial benefits:

Do check your privacy settings. Whether you are using Twitter or some other social networking site, you should always be aware of who can see your tweets. Twitter allows you to make your tweets completely public or limit them to pre-approved individuals.
Don’t share sensitive non-public information. This one might seem like a no brainer, but if you are the CEO of a major corporation, discussing your dinner guests, vacations, travel plans, or even your health might pose a problem because of the inferences that may be drawn from that information. (The SEC has scrutinized Apple Inc.’s early 2009 disclosures relating to Steve Jobs’ health.)
Do read and monitor the terms and conditions of your social networking site. Be sure to understand the service, privacy, ownership, and security terms of your social network accounts. Twitter has recently changed its terms of service — see http://twitter.com/tos — to allow for “third party providers and partners” to place “advertising … in connection with the display of Content” on its website. It also says “[w]e’re leaving the door open for exploration in this area…” So it’s wise to continually monitor the policies controlling your account for any changes which might significantly affect your use of Twitter.
Don’t use social networking sites to disparage your competition or to spread rumors. No matter how much you dislike your competition or believe that they have committed any wrongdoings, be careful what you say about them. By airing grievances publicly, you are inviting a public and potentially litigious battle. (An apartment management company in Illinois sued a tenant for libel over a "malicious and defamatory" tweet about the state of her apartment to her 20 followers on Twitter.)
Do read and comply with your company’s social networking policy. Before you start tweeting, consult your company’s policy on using social media. It may require you to add a disclaimer to your Twitter account saying that your views are not the views of your employer. If your company does not have a social media policy, it might be prudent to create one--because it doesn’t look like social media is going away anytime soon. (a helpful advisory can be found at “Why You Need a Policy If Your Employees Are Twittering,” Society for Human Resource Management’s online publication, April 2009).

George A. Stamboulidis (at left) is the managing partner of the New York office of Baker Hostetler. He is a former federal prosecutor and the co-leader of the firm’s national White Collar Defense and Corporate Investigations practice. He has served as a corporate monitor for global corporations and counsels and represents corporations, boards, and executives on compliance, criminal, and regulatory matters.

Alberto Rodriguez is an associate in Baker Hostetler’s commercial litigation practice group. He has experience representing clients in the financial industry before regulatory bodies and in complex litigation.

The authors can be contacted at gstamboulidis@bakerlaw.com and alrodriguez@bakerlaw.com.