Legal and Regulatory Requirements
In addition to professional guidelines for transparency and disclosure, practitioners have to be aware of legal and regulatory requirements. The Securities and Exchange Commission (SEC) has extensive rules concerning information released about publicly-traded companies.
For example, the SEC’s Regulation Fair Disclosure policy requires that all “material nonpublic information” must be released to investors at the same time in an effort to minimize insider trading. In 2012, the SEC used this regulation to charge a public relations practitioner for using nonpublic information gained by working with the client.
The practitioner learned that her client was about to purchase a bank and bought stock in that bank before making that information public. She benefited financially from using this nonpublic information. Not only did she violate SEC regulations, she damaged her ethical standing with current and potential clients.
The Federal Trade Commission (FTC) regulates the types of information that can be used in public relations about products and services. Recently, the regulators updated the rules about disclosure on the internet and required that promotional content must be disclosed.
This regulation change means internet content creators must state anything of value given to them to secure coverage. As an example, if you create a YouTube video that uses a donated or even discounted product, you must disclose that relationship.
Additionally, practitioners must follow industry specific guidelines. For example, if you are in the medical area, you need to follow Food and Drug Administration rules. Similarly, if you are in higher education, you need to abide by the Family Education Right and Privacy Acts that limit the type of information that can be released by universities. Every industry has specific rules and regulations that practitioners must follow. Following these guidelines not only helps organizations to abide by the law, but also to be transparent and ethical.Next Page: Case Study: Flint, Michigan, Water Crisis Part 2