Corporate and Securities Alert: SEC Guidance on Using Social Media to Disclose Material Non-public Information

by Fenwick & West LLP

On April 2, 2013, the Securities and Exchange Commission issued noteworthy guidance on the use of social media to disclose material information in compliance with Regulation FD (Fair Disclosure).

The SEC guidance took the form of a press announcement and investigative report about whether Netflix and Netflix CEO, Reed Hastings, violated Regulation FD when Mr. Hastings disclosed – on his personal Facebook page – favorable news about the number of hours of content that Netflix streamed in a month. After investigating, the SEC determined not to pursue an enforcement action in the matter. However, the investigative report did conclude that Regulation FD was not satisfied when a company's material, non-public information was disclosed on the widely-followed personal social media site of a company executive, where investors were not informed that the company intended to disclose such information through that social media channel. The key takeaway is that companies may use emerging social media channels for their corporate communications, provided they manage them like other channels of communication to comply with Regulation FD.


Regulation FD prohibits public companies and anyone acting on their behalf from disseminating material, non-public information selectively to shareholders and securities professionals where it is reasonably foreseeable that they will trade on that information, unless the information is simultaneously disclosed in a manner that is reasonably designed to achieve broad and non-exclusionary distribution to the public.

The SEC investigation followed Mr. Hastings' July 3, 2012, use of his personal Facebook page, which had approximately 200,000 subscribers at the time, to announce that Netflix had streamed 1 billion hours of content in the prior month. This news was eventually discussed in stages by technology bloggers, research analysts and the financial press, and Netflix stock rose from $70.45 per share at the time of the post to close at $81.72 per share the following trading day. Netflix had not previously announced the streaming milestone through any of its regular disclosure channels, such as investor letters, press releases or Form 8-K disclosures. Further, Netflix had not indicated that material information about Netflix might be communicated through Mr. Hastings' Facebook page.

Investigative Report

At the conclusion of its investigation, while announcing that it had determined not to pursue an enforcement action in this matter, the SEC issued a report ("Report") reminding companies that Regulation FD applies to social media channels that are used to disclose material, non-public information about public companies. The Report reinforces the SEC's August 2008 guidance on the use of websites, blogs and other other "push" technology forms of communication to provide material information to investors in compliance with Regulation FD, and applies that earlier guidance to the social media context.

In the Report, as in its 2008 guidance, the SEC recognized that companies may wish to use methods other than customary press releases and Form 8-K filings to disclose material information. Communications through social media channels require Regulation FD analysis comparable to that used for communications through traditional channels. If the disclosure is made to shareholders and investment professionals, and it contains material, non-public information about the company, then the company must consider whether it is being disseminated in a manner "reasonably designed to provide broad, non-exclusionary distribution of the information to the public." The Report concluded that disclosure of material, non-public information on the personal social media site of an individual corporate officer, without advance notice to investors that the site may be used for this purpose, is unlikely to satisfy this standard. When extending corporate communications to new channels, a company must take steps to alert the investing public to the communication channels it intends to use to disseminate material information, and the types of information that might be disclosed through those channels.

Next Steps

As noted in the Report, the SEC guidance does not establish a "one size fits all" standard for disclosure practices. Companies considering the use of social media channels to disseminate material information to investors should be thoughtful and deliberate in that transition, in order to make certain that investors receive adequate advance notice of the use of the particular channel, and that investors do not find the channel unduly burdensome to monitor. Companies desiring to establish their websites or social media as Regulation FD compliant communication channels should consider notifying investors, through their periodic reports and press releases, of the sites or social media channels the company intends to use to disseminate material, non-public information, and to do so for a period of time before going "live" with that channel (for example, investors may need time to register to receive information through the channel). In any event, the company must be confident that the new channel will effectively disseminate information in a broad, non-exclusionary manner to the public before it is used to disseminate material information.

If you have questions about the application of this guidance from the SEC, please contact any member of your Fenwick securities team.

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.

© Fenwick & West LLP | Attorney Advertising

Written by:

Fenwick & West LLP

Fenwick & West LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.