On April 2, 2013, the Securities and Exchange Commission issued a Report of Investigation that directly addresses the application of Regulation FD to disclosures made through social media channels such as Facebook and Twitter. The Report confirms that the SEC’s prior Regulation FD guidance applies to communications via social media, cautioning that companies must still carefully examine the factors indicating whether a particular social media channel is a “recognized channel of distribution” for communicating with investors, and emphasizing the importance of alerting the market as to the particular social media channels that companies intend to use.

Given the increasing use of social media by companies in communicating with investors and the public generally, the Report provides an important acknowledgement that the SEC encourages companies to use new forms of communication to better connect with shareholders, and eases uncertainty regarding the application of prior Regulation FD guidance to social media communications.