SEC hits ‘like’ on corporations releasing info on social media
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The Securities and Exchange Commission caught up to the 21st century today. The agency issued a ruling basically saying that posting corporate news on Twitter or Facebook is just as legitimate as a media release or a regulatory filing.
The SEC even said it “encouraged” companies to “seek out new forms of communication to better connect with shareholders.” Memo to the SEC. Facebook’s about a decade old.
The controversy over tweeting and Facebooking corporate news started last summer with a Facebook post by Netflix CEO Reed Hastings. He wrote that Netflix had surpassed a record for streaming content: 1 billion hours in a single month, a stat that prompted Netflix’s stock price to shoot up.
Joseph Grundfest is a former SEC commissioner who teaches business and law at Stanford.
The SEC’s argument against the Netflix post was “that this information material non-public information… and shouldn’t have appeared on Reed Hastings’ personal Facebook page without prior notification to the market,” says Grundfest.
The ruling today makes clear that Hastings’ Facebook post was fine. Investors simply need a heads up when a company may be releasing new information through social media, and where to look for it.
But don’t expect companies to start live tweeting their regulatory filings.
“The typical disclosures by publicly traded companies… the very large forms will continue to be disclosed the regular way.” Grunfest says. “You can’t post that on Facebook and you certainly can’t tweet all that information. “
But experimentation will prevail. After the ruling, Goldman Sachs sent the SEC its thanks in a tweet.
Hastings’ post ultimately held up under SEC scrutiny. But a company’s faux pas on social media can go oh-so much further. We’ve compiled a slideshow of some of the worst corporate social media fails. Cast your vote on which was the worst here.
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