Zipcar Makes S.E.C. Filing After Executive’s Twitter Message

Zipcar Makes S.E.C. Filing After Executive’s Twitter Message

Scott Griffith, the chief executive of Zipcar, was still riding high on Friday, two days after Avis announced that it was buying his company for $ 500 million. He appeared on CNBC to discuss the sale, and showed further enthusiasm for the deal — and the publicity surrounding it — by posting on Twitter:

Mr. Griffith’s 86-character message, however, created extra work for the legal department at Zipcar, which by the end of the day Friday had made a filing with the Securities and Exchange Commission disclosing it to Zipcar’s investors.

Zipcar’s short 8-K filing said:

On January 4, 2013, Scott Griffith, chairman of the board of directors and chief executive officer of Zipcar, Inc. (“ Zipcar ”), posted communications on Twitter regarding the announcement on January 2, 2013 by Zipcar and Avis Budget Group, Inc. (“ Avis ”) of the execution of an Agreement and Plan of Merger among Zipcar, Avis and Millennium Acquisition Sub, Inc. (the “ Transaction ”). A copy of Mr. Griffith’s communications posted on Twitter is filed as Exhibit 99.1 hereto and is incorporated herein by reference. A copy of the article, dated January 3, 2013, appearing in The Boston Globe to which Mr. Griffith’s communications refers is filed as Exhibit 99.2 hereto and is incorporated herein by reference.

Zipcar’s filing also mentioned that Mr. Griffith appeared on CNBC to discuss the Avis deal, and attached a copy of the transcript of Mr. Griffith’s discussion with the program’s hosts.

The unusual filing by Zipcar comes a month after the Securities and Exchange Commission told Netflix that it was considering filing a lawsuit against the movie-rental company related to a Facebook post by its chief executive, Reed Hastings. In the post, Mr. Hastings congratulated his team for a job well done in early July, and trumpeted the one billion hours of video that subscribers watched the previous month. The message was just 43 words.

In the Netflix situation, the S.E.C. said it was concerned about whether by posting the information on Facebook instead of a broadly issued news release, Mr. Hastings was disclosing material information to select investors. In so doing, Mr. Hastings potentially violated the Regulation Fair Disclosure rule, commonly known as Reg FD, which requires a company to announce information that is material to its business to all investors at the same time.

Zipcar made the S.E.C. filing about Mr. Griffith’s Twitter message because the transaction with Avis is subject to Zipcar’s shareholder approval and securities laws dictate that the company must file with regulators any announcements that could be construed as soliciting shareholder votes.

Writing for DealBook last month about the Netflix case, Steven M. Davidoff criticized the securities laws for being somewhat outmoded in the social media age, and argued that executives’ posting on Facebook and Twitter was a good thing.

“If the idea behind Regulation FD is to encourage disclosure, then allowing executives to comment freely on Facebook and Twitter, recognizing them as a public space akin to a news release, is almost certain to result in more disclosure, not less, and reach many more people than an S.E.C. filing would,” Mr. Davidoff wrote. “The agency’s position will only force executives to check with lawyers and avoid social media, chilling disclosure.”

In any case, Congress probably didn’t have any of this in mind in 1934 when they passed the Securities Exchange Act.


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