SEC Issues Guidance Update on Social Media Filings by Investment Companies

The SEC Division of Investment Management released guidance on when the Investment Company Act or Rule 497 of the Securities Act requires an investment company to file interactive content posted via social media. Whether content must be filed depends on the content, context, and presentation of the information transmitted, with particular attention placed on the substance of the communication. Examples of communications that would and would not require filing appear below.

Content That Does Not Require Filing

• An incidental mention of the investment company name or family of funds, e.g., "More than 100 Fund X employees volunteered for our Annual Day of Caring!"
• The incidental use of the word "performance" in connection with a discussion of the investment company, without specific mention of the fund's return metrics, e.g., "We update the performance of our funds every month and post the results on our website."
• A factual introductory statement including a hyperlink to a fund prospectus filed pursuant to Section 24(b) or Rule 497, e.g., "We launched two new funds this week. More information about them is available on our website."
• An introductory statement not related to a discussion of the investment merits of a fund that includes a link to general financial information, e.g., "Follow this link for a Q&A with our portfolio manager on his views of the economy in 2013."
• A response to an inquiry by a social media user that provides discrete factual information not related to the investment merits of the fund but directs the user to information filed pursuant to Section 24(b) or Rule 497, e.g., "What are the expenses for ABC fund?" Fund response: "Information regarding the fees of ABC fund can be found at this link on our website."

Content That Does Require Filing

• A discussion of fund performance that provides specific mention of the fund's return or promotes a fund's returns, e.g., "Our quarter-end returns have exceeded our expectations."
• A communication initiated by the issuer that discusses the investment merits of the fund, e.g., "As you plan for retirement, consider ABC fund."

View Guidance in full here (links externally to SEC website).Related News: "SIFMA Submits Comments to the FFIEC on Social Media: Consumer Compliance Risk Management Guidance" (March 15, 2013).