Do Dick Costolo's Comments Run Afoul of SEC Rules?

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Oct. 8 (Bloomberg) -- Rocket Lawyer Chairman Charley Moore examines the legal issues surrounding Twitter's S-1 filing. He speaks with Cory Johnson on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

I would surprise that dick costolo would say anything during this period, but have his comments or tweets run afoul of sec rules?

Only the sec is going to say that for sure, cory, but it is unusual for a ceo to make statements.

During the quiet period, the period between when you file your registration statement and it is considered filed by the sec, that is called a quiet period.

During that time, ceos and insiders are prohibited from making any statements that in ordinary investor is going to use to make their investment decision.

The thinking they're being that all of that information should be in the prospectus and roadshow.

Calling someone names probably not that big of a deal, whereas, another example, a phone call i took down one time, the company will be wildly profitable and the sec filing said the's -- said the opposite.

That is a comment that would affect the decision.

Anybody will look at the two situations and judge them quite differently.

The issue is an important issue.

I think we will probably see less comedy about that issue going forward, i would guess.

[laughter] i wonder, if we are in an era where media companies, it is a regular thing for dick costolo to be talking as part of the regular business, doing customer meetings and calls -- does regular business have to stop during ip registration?

The idea is that regular business does not have to stop.

You are still tweaking print i saw you tweeting this morning.

I still use twitter.

They have customers they have to continue to serve.

Regular business doesn't stop.

There are rules.

Now is the time when the company is supposed to be in a quiet period.

They are selling.

They are selling stock right now.

I want to move beyond this.

When you look at this filing, what was your biggest take away from a legal perspective?

I really thought this was quite a transparent ipo disclosure.

They had more risk factors than facebook.

Folks have done a word count -- with a smaller business.

Actually, it is probably appropriate.

Facebook's business was making money.

Twitter's business is still losing money.

I did find it to be a pretty refreshing ipo document.

20 -- twitter is a pretty darn democratic company.

That is some of the commenting i have been doing about it.

Twitter has one vote per share, which is kind of going against the grain in silicon valley.

We have had so many companies from groupon to zynga to facebook with all these multiple classes of shares.

I will throw in google as well.

You buy a share and you get a vote.

That doesn't mean -- i've been an advocate in favor, in many contexts, having strong founder control of companies -- when you look at it, facebook has rebounded from their ipo.

Charlie moore, thank you very much.

We will be right back with more of "bloomberg west" in just

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