Publicly traded companies can use
social media outlets such as Facebook and Twitter to announce key information,
as long as investors have been alerted about which social medial will be used,
the Securities and Exchange Commission (SEC) announced on Tuesday.
report of investigation confirms that its fair disclosure rules -
Regulation FD - applies to social media and other emerging means of
communication used by public companies the same way it applies to company
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
"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, in a release. "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."
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 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.