SEC: OK to use Twitter, Facebook for announcementsApril 2, 2013: 4:24 PM ET
Netflix CEO Reed Hastings caused a stir last year after he revealed that Netflix's monthly online viewing had exceeded one billion hours on his Facebook page instead of a press release or public filing. That raised concerns about whether social media posts were in compliance with the Securities and Exchange Commission's Regulation Fair Disclosure (Regulation FD) rules.
But following an investigation prompted by Hastings' post, the SEC has decided it's OK for companies to turn to Facebook, Twitter and other social media outlets to release important information, as long as they alert investors in advance about which platforms they will use.
The SEC said its investigation confirmed that Regulation FD applies to social media the same way it applies to company websites -- as long as investors have been told to look for information there.
"One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information," said George Canellos, acting director of the SEC's Division of Enforcement. "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."
Last year, Hastings' post, which was widely reported by the media, sparked a 13% rally in Netflix (NFLX) shares.
The SEC said the social media site of a company executive is unlikely to qualify as an acceptable and lawful method of disclosure without advance notice to investors.
"Personal social media sites of individuals employed by a public company would not ordinarily be assumed to be channels through which the company would disclose material corporate information," the SEC said.
Market watchers had mixed feelings about the development:
How are companies going to "alert investors" about imminent tweets? Through an 8-k filing? "Look for a spontaneous tweet from Elon tomorrow"—
Eric Jackson (@ericjackson) April 02, 2013