Commission says Reg FD applies to social networks the same as it does to web sites
In another move recognizing the vast reach of social networks, the SEC on Tuesday indicated that a company can disclose any information that might affect its stock price via social media -- as long as the firm makes clear that such announcements might first appear on Facebook or Twitter.
The fair disclosure rule “applies to social media and other emerging means of communication used by public companies the same way it applies to company websites,” the Securities and Exchange Commission said in a statement. In 2008, the SEC approved the use of websites to disseminate corporate information, if investors have been told to monitor the sites for announcements.
On Tuesday, the agency applied the same approach to social media. It made its decision based on an investigation of an incident involving Netflix chief executive Reed Hastings.
On July 3, 2012, Mr. Hastings used his personal Facebook page to announce that the movie-rental firm had registered more than one billion hours of online viewing in June. The company did not include this information in a subsequent press release or an SEC filing.
Mr. Hastings had never before used his personal Facebook page to announce company metrics, according to the SEC. The company's stock price increased from $70.45 to $81.72 in the day following Mr. Hastings' Facebook post.
The SEC has not alleged that Mr. Hastings broke any securities laws. But it is using the incident as an example to guide future behavior.
“One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information,” George Canellos, acting director of the SEC's Division of Enforcement, said in the statement. “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.”
