Twitter, the new stock ticker tape - and the SEC is OK with this
Investors: Tune into tweets or Facebook for biz info
Financial watchdog the SEC has ruled that listed companies can make key announcements and publish financial info on Facebook and Twitter. The decision follows an investigation sparked by Netflix CEO Reed Hastings.
Hastings posted on Facebook in June that subscribers to video-on-demand biz Netflix had watched more than a billion hours of material that month - a stat that ramped up the company's share price as news of it spread.
The Securities and Exchange Commission (SEC) then considered whether Netflix violated a rule in place to make sure that all investors can get access to critical business information at the same time, usually in a press release or Form 8-K filing.
The commission has now said that it's all right for companies to announce things through Facebook or other social networks, as long as investors know which websites will be used to hand out the 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 enforcement division.
“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 regulator added that, for example, the Twitter account of an individual corporate officer was unlikely to be considered an obvious source of knowledge.
"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 stated in a conclusion to its Netflix-sparked investigation.
"Without adequate notice that such a site may be used for this purpose, investors would not have an opportunity to access this information or, in some cases, would not know of that opportunity, at the same time as other investors."
The commission also said that Hastings was off the hook for his little indiscretion since there had been "market uncertainty" about using social networks for company disclosures. ®
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