Social media is a good fit for lighthearted culture and content, but is it really the right channel for disclosing financial information to stockholders? According to the Securities and Exchange Commission, that answer is yes. On Tuesday, April 2nd 2013 the SEC released a report approving social media as an appropriate means for communicating with investors.
“Companies can use social media outlets like Facebook and Twitter to announce key information in compliance with Regulation Fair Disclosure so long as investors have been alerted about which social media will be used to disseminate such information,” the report read.
This seems to be SEC’s latest effort to keep up with changing digital times; back in 2008 they ruled that websites are a suitable means for communicating shareholder information.
One caveat for social media and websites alike is disclosure: companies must notify investors that the given platform will be used to communicate important information. So if you’re taking your numbers to Facebook or Twitter, be sure to alert investors beforehand of the appropriate accounts to watch.
In the end, it’s all about leveling the playing field in terms of information. “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 the 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.”
The above appears to apply to announcements from company accounts rather than personal accounts of executives. The SEC seems to be wary of the latter, noting that announcements from individual corporate officers are “unlikely to qualify as an acceptable method of disclosure under the securities laws [because] 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.”
This announcement from the SEC is the latest public embrace of social media in a highly regulated industry. Several weeks back, the FTC gave endorsed tweets the official OK. What’s next?