Back in April, The U.S. Securities and Exchange Commission gave rise to the next major evolution in investor relations when it OK’d the disclosure of material information via Twitter, Facebook, and other social media platforms. The next day, Bloomberg announced that its data terminals would begin following the Twitter feeds of countless companies, CEOs, executives, economists, and high-profile investors for actionable intelligence.
One month later, it seems that Bloomberg was one of the only Wall Street players ready for the SEC’s decision. The flood gates may be open, but very little market-moving news is flowing. In fact, the silence on blogs, Twitter, and Facebook, is almost deafening.
So far, early indications show that corporate IR programs are approaching social media with an abundance of caution. Even Netflix CEO Reed Hastings – whose July 2012 Facebook post sparked the SEC investigation that eventually led to the Commission’s OK – has only dipped a toe in the social media waters. Netflix, along with a few other companies including General Electric and Zillow, have taken the first step in compliance with the new regulatory paradigm by informing investors that material information will be posted to their social media properties. But those announcements have yet to be followed by any noteworthy disclosures.
To some, the lack of activity to date is somewhat of a head-scratcher. Some general counsels may be wary of the fact that the SEC’s green light came in the form of a report on the Netflix investigation, rather than official guidance. But the report is crystal clear in its endorsement of social media as a disclosure mechanism as long as investors have been alerted beforehand. There are also no significant governance changes that need to take place before IR departments can avail themselves of social media additional disclosure tools that help expand the speed and reach with which their messages impact the marketplace.
At the same time, the philosophical case for material disclosures via social media is strong. After all, the Dodd-Frank era is all about investor empowerment – and what could be more empowering than providing even the smallest shareholder with the ability to engage management in two-way conversations about the decisions and policies that impact their portfolios? What IR program wouldn’t want the added trust and credibility that come with such openness and transparency? And what IR program wouldn’t want the added benefit of being considered a trailblazer of the investors-first era?
But therein lies the rub. Because social networks are, by definition, conversational tools, public companies need to be ready for the possibility that any disclosure made via a social platform could incite a virtual annual meeting; where tough questions are posed, boards and C-Suiters are criticized, and opposing – and even hostile – visions are put forth. Worse yet, companies that stonewall or ignore negative sentiment will confront even harsher consequences as they fail to meet the high standard of transparency that their own social media engagement sets.
That’s certainly a scary prospect for IR programs that have predominantly communicated by megaphone – but it’s one that they will have to embrace before long. The convergence of IR and social media is just the next step in Wall Street’s democratization. It’s only a matter of time before a public company recognizes that fact and jumps in head first. When that happens, everyone else is going to look like a wallflower to investors who want more of a voice in corporate governance than ever before.
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Richard Levick, Esq., Chairman and CEO of LEVICK, represents countries and companies in the highest-stakes global communications matters — from the Wall Street crisis and the Gulf oil spill to Guantanamo Bay and the Catholic Church. Mr. Levick was honored for the past four years on NACD Directorship’s list of “The 100 Most Influential People in the Boardroom,” and has been named to multiple professional Halls of Fame for lifetime achievement. He is the co-author of three books, including The Communicators: Leadership in the Age of Crisis, and is a regular commentator on television, in print, and on the most widely read business blogs.