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SEC Says Social Media OK For Company Announcements

The Securities and Exchange Commission (SEC) says it is okay for companies to use social media outlets like Facebook and Twitter to announce key information in compliance with Regulation Fair Disclosure (Regulation FD), so long as investors have been alerted about which social media will be used to disseminate such information.

SEC’s report of investigation confirms that Regulation FD applies to social media and other emerging means of communication used by public companies the same way it applies to company websites.

The SEC issued guidance in 2008 clarifying that websites can serve as an effective means for disseminating information to investors if they’ve been made aware that’s where to look for it.  .

George Canellos (Acting Director, Division of Enforcement, SEC): 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 report of investigation stems from an inquiry the Division of Enforcement launched 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 Form 8-K filing, and a subsequent company press release later that day did not include this information. Neither Mr. Hastings nor Netflix had previously used his Facebook page to announce company metrics. Netflix’s stock price had begun rising before the posting, and increased from $70.45 at the time of the Facebook post to $81.72 at the close of the following trading day.

The SEC did not initiate an enforcement action or allege wrongdoing by Hastings or Netflix.

The SEC’s inquiry was conducted by Cameron P. Hoffman, Michael E. Liftik, and assistant regional director Cary S. Robnett in the San Francisco.

 

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