The Securities and Exchange Commission (the "SEC") recently issued a Report of Investigation (the "Report") in which it provides helpful guidance to public companies regarding their use of social media to disclose material non-public information. The Report was issued after the SEC's investigation into whether the CEO of Netflix had violated the company's disclosure obligations under Regulation FD when he posted a statement on his personal Facebook page regarding the amount of content Netflix subscribers had accessed. While the SEC elected not to initiate an enforcement action against Netflix or its CEO, the SEC took the opportunity to address the issue of disclosing material non-public information through social media platforms used by many companies today.

Summary of Regulation FD Disclosure Requirements -

One of the primary goals of Regulation FD is to promote full and fair disclosure of material non-public information by public companies. Regulation FD provides that when an issuer discloses material non public information to holders of its securities or to securities market professionals who are reasonably likely to trade on the information, the issuer must make a simultaneous disclosure (in the case of intentional disclosure of the information) or prompt disclosure (in the case of unintentional disclosure of the information) of the same information to the general public. The rule is designed to prohibit the selective disclosure of material non-public information. To comply with this disclosure requirement, a company can file a Form 8-K with the SEC or it can release the information through one or more other methods that are reasonably designed to provide broad, non-exclusionary distribution of the information to the general public.