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Felix Shipkevich April 3, 2013

The Securities and Exchange Commission (SEC) stated on Tuesday that public postings on sites such as Facebook and Twitter are now allowed to communicate company announcements. The SEC added that updates posted on social media are just as good as news releases and company websites — given that the companies have alerted investors as to which outlets they plan to use.

The SEC’s new policy comes as part of a report outlining its investigation into Netflix’s Chief Executive Officer Reed Hastings, who, back in July — posted monthly viewership results on his Facebook page — rather than in an SEC filing or news release. After an investigation into the issue in December, no enforcement actions were brought against Hastings or Netflix by the SEC, mainly because the agency had yet to define any rules or guidelines around using social media for company disclosures. Netflix’s Hastings said, in an email to The Wall Street Journal, that he “views social media as an important method of communication and, consistent with the SEC’s guidance in this area, will continue to do so.”

George Canellos, acting director of the SEC’s enforcement division said in a statement to Bloomberg, ” 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.” Additionally, in a report released to The Wall Street Journal, the SEC said: “An increasing number of public companies are using social media to communicate with their shareholders and the investing public…We appreciate the value and prevalence of social media channels in contemporary market communications, and the commission supports companies seeking new ways to communicate.”

At issue, is the fair-disclosure rule, which requires companies to disseminate information in a way that would not give an advantage to one group of investors over another. The SEC notes that filing an 8-K form, or holding an earnings call, are both ways to ensure compliance with the regulations. The SEC stated in 2008 that companies could use their corporate home pages, under certain circumstances, to disseminate sensitive information.

While the SEC didn’t explain how a company should inform investors about social media use, their new guidance should give companies an opportunity to communicate with investors via Facebook and Twitter.