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SEC: OK to use Twitter, Facebook for announcements

April 2, 2013: 4:24 PM ET

Netflix CEO Reed Hastings sparked an SEC investigation 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.

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."

Related: SEC's new social media policy falls short

Last year, Hastings' post, which was widely reported by the media, sparked a 13% rally in Netflix (NFLX) shares.

And just last week, Tesla (TSLA) shares jumped after CEO Elon Musk tweeted about a potentially market-moving announcement.

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:

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Hibah Yousuf
Hibah Yousuf
Reporter, CNNMoney

Hibah Yousuf is a reporter at CNNMoney, where she covers stocks, bonds, commodities and currencies trading across the globe, as well as corporate earnings and other markets-related news. Prior to joining the site in 2009, she interned at Money Magazine.

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