Great News! But Don’t Tweet It, Yet


The Securities and Exchange Commission gave the green light last week for companies to share material, nonpublic information with investors over social media – as long as companies disclose beforehand which specific channels will be used.

That means key company information sent through social media can comply with Regulation Fair Disclosure, or Reg FD – designed to level the playing field by ensuring that companies disseminate relevant information to Main Street at the same time (and place) as big institutional investors – as long as it is subject to the same Reg FD analysis as communications made through more traditional channels.

This may have come as a relief to Netflix CEO Reed Hastings, who became the subject of an SEC investigation last year after he boasted on his personal Facebook page that Netflix reached 1 billion hours of video watched in June – sending the company’s stock up 17%. Although the SEC’s report was prompted by Hastings’ Facebook fail, it’s aimed at all publicly traded corporations and raises many compelling questions about the future of corporate social media. Here are some thoughts on this fascinating subject from one of our recent brainstorms:

  • Will the use of social media to broadcast company information blur the lines between different corporate functions (e.g., investor relations, marketing, and advertising), given that each one of these departments might legitimately claim ownership of this type of social media messaging?
  • Must the company’s investor relations team now be aligned with social media, advertising, and marketing experts and how should that training be done?
  • What extra risks may confront senior executives who enjoy using social media? Are new levels of training required for executives who both have access to material information and are active social media users?
  • Will this guidance deter or encourage executives to use social media tools? How will existing social media policies be revised? For example, how do you “tweet” a safe harbor statement?
  • Can companies expect to see an increase in followers on their social media channels? If so, should organizations take steps to leverage any spikes they see in their social media influence?
  • Who needs to understand the SEC’s definition of “material, non-public information?”
  • Do hackers now have a new incentive to pry into corporate social media accounts?

We’ll be keeping an eye on developments in this area – and will likely have corresponding points-of-view — stay tuned.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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