The Securities and Exchange Commission (SEC) has given the go ahead for companies to announce key financial information via social media outlets like Facebook and Twitter, as long as they make clear to investors in advance which social media they will be using.
The US regulator has issued a report confirming Regulation Fair Disclosure (Regulation FD) applies to social media and other emerging means of communication used by public companies the same way it applies to company websites. Regulation FD requires companies to distribute material information in a manner reasonably designed to get that information out to the general public broadly and non-exclusively.
George Canellos, acting director of the SEC's division of enforcement said: 'One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information. Most social media are perfectly suitable methods for communicating with investors, but not if the access is restricted or if investors don't know that's where they need to turn to get the latest news.'
The SEC's ruling comes after it launched an investigation into a post by Netflix CEO Reed Hastings on his personal Facebook page stating that Netflix's monthly online viewing had exceeded one billion hours for the first time. Netflix did not report this information to investors through a press release or an official disclosure at the same time.
Neither Hastings nor Netflix had previously used his Facebook page to announce company metrics, and they had never before taken steps to alert investors that Hastings' personal Facebook page might be used as a medium for communicating information about Netflix. Netflix's stock price had begun rising before the posting, and increased by more than 10% between the online release of information and the close of the following trading day.
SEC's investigation found there was no wrongdoing in the Netflix case, but said it was issuing its latest guidance as clarification to avoid market confusion on the use of social media to release company information.
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