SEC: Social media cleared for company announcements -- with a catch
CEOs and other executives have been given the all-clear by the U.S. Securities and Exchange Commission to publish company announcements via social networks such as Twitter and Facebook.
Well, almost the all-clear.
According to a statement issued on Tuesday, the SEC stipulated that these digital channels can be used for corporate news and announcements "so long as investors have been alerted about which social media will be used to disseminate such information."
George Canellos, acting director of the enforcement division at the SEC, asserted in the statement that "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," Canellos continued.
This also means that the SEC's Regulation Fair Disclosure (Regulation FD) now applies to social media and "other emerging means of communication" in the same way that investor relations websites do.
Here's more:
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. It is intended to ensure that all investors have the ability to gain access to material information at the same time.
The SEC's decision came about following an investigation into Netflix and the social media activity of its CEO, Reed Hastings.
To recall back in December, the legal agency mulled over slapping the online rental giant with a lawsuit after Hastings disclosed some corporate information on his Facebook page rather than through a filing or earnings statement.
However, as the SEC pointed out today, the Commission ended up refraining from initiating any legal or law enforcement action against Netflix.
For a closer look at the SEC's full report on the investigation into Netflix and Hastings' social media announcements, scroll through the document below: