is it permissible to release news through social media? it depends
DESCRIPTION
The SEC has come out with guidelines on what is acceptable when releasing news via social media based on current and past rulings.TRANSCRIPT
Is It Permissible to Release News Through Social Media? It Depends.
How does the modern IRO reach their audience of investors?
The SEC’s Approval with Caveats
The SEC recently released a report outlining approval of the use of social media outlets such as Facebook and Twitter for the dissemination of material non-public information by corporations, as long as certain requirements are met.
The New SEC Guidelines
Advance notice must be given to investors that the company is using social media outlets for dissemination of news.
The social media accounts should be a corporate account and not the personal account of an office, director, or employee.
The CFO, legal, or investor relations department should be consulted with prior to a disclosure for appropriateness, and the relevant department should monitor the social media account after the news has been posted.
Background to the Guidelines
In July of 2012 Netflix CEO Reed Hastings used Facebook to boast that NFLX monthly viewing exceeded 1 billion hours.
Hastings maintains the post wasn’t material; the SEC investigated and found nothing wrong with the use of his public profile and that social media could be used.
Basis for SEC’s Social Media Decision
The SEC based its 2013 decision on several previously published rules and regulations:
The Regulation Fair Disclosure (2000)
Reg FD is to ensure news is directed to the public in a broad non-exclusionary method, primarily via news releases and SEC form 8-K.
The Website Dissemination Guidance (2008)
Acknowledged the use of a corporate website for dissemination of material non-public news as long as certain criteria were met.
What Should a Company Do?
Companies should update their Disclosure Policy to include social media as a news dissemination method.
Consider a dedicated IR social media channel.
Use this opportunity to reduce IR costs, use labor more efficiently, and control your own messaging formats and publication timelines.
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