SEC Outlines Position on FD Disclosure Using Social Media

The Securities and Exchange Commission (SEC), on April 2, 2013, outlined a new disclosure position that clarifies that public companies can use social media outlets like Facebook and Twitter to announce key information in compliance with Regulation Fair Disclosure (Regulation FD). Effectively, this new SEC position represents an update to the SEC’s August 2008 Guidance on the Use of Company Websites1 and a necessary response to the increased use of communications through social media that has occurred in the past five years.

Regulation FD prohibits public companies, or persons acting on their behalf, from selectively disclosing material, nonpublic information to securities professionals or shareholders where it is reasonably foreseeable that they will trade on that information before the information is generally made available to the public. This rule was adopted in 2000 out of concern that public companies were selectively disclosing important nonpublic information, such as advance warning of earnings results, to securities analysts before making full disclosure of the same information to the general public. While even in 2000, the SEC noted that Regulation FD “does not require use of a particular method, or establish a ‘one size fits all’ standard for disclosure,” in practice the conservative approach to comply with Regulation FD had been through the use of disclosure in a Form 8-K filed with the SEC either as a primary method of disclosure or to simultaneously supplement other public disclosure.

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