S.E.C. Sets Rules for Disclosures Using Social Media

The SEC recently outlined new disclosure rules that clarify how companies can use Facebook, Twitter, and other social networks to distribute information to the public, as long as they meet certain requirements.

With the new guidelines, it seems as though the S.E.C. recognized the presence of social media. In the past, the federal agency sent warnings to companies, such as Netflix, that it could take against them for messages posted by chief executives.

Regulators outlined that companies can treat social media as legitimate outlets for communication, much like corporate Web sites. However, corporations must make clear which Twitter feeds or Facebook pages will serve as potential outlets for announcements.

The agency’s enforcement chief indicated that “One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information…Most social media are perfectly suitable methods for communicating with investors, but not if the access is restricted or if investors don’t know that’s where they need to turn to get the latest news.”

Do you think social media is an acceptable forum for receiving pertinent company information? Although the S.E.C. has made strides in recognizing social media, it may still reduce company spontaneity, as companies may still have to file the information it releases with the agency at the same time. Do you think the S.E.C. has come far enough in recognizing social media as a viable source of information?

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2 thoughts on “S.E.C. Sets Rules for Disclosures Using Social Media

  1. In my opinion I feel that companies disclosing relevant information on sites such as Facebook is ok as long as that same information is made available on their website. This would still allow all shareholders to have access to that information. With Facebook now becoming the new “base” of people information when searching over the internet it makes sense for companies to place information on their page. I think the SEC would still need to research the impact of the available Social Media tools out there and how they are shaping business operations. I am not sure that the SEC knows what the full capabilities of these available tools are yet so it would be hard to determine what type of regulation would be needed.

  2. I think Facebook and Twitter are acceptable but companies would need to be sure the forum is completely disclosed so that investors are kept apprised, such as publishing the information in the company annual report and on the company website. It seems that if the S.E.C. has taken the initiative to outline new disclosure rules, they have recognized the significance of integrating the information to social media networking, versus it seems they were previously opposed by the issuing of warnings. Since the S.E.C outlined the criteria, it seems they are attempting to use a comprehensive strategy and are at least attempting to engage.

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