SEC gives OK for companies to publish announcements on Facebook, Twitter

The Securities and Exchange Commission (SEC) issued a report on Tuesday that says companies can announce key information on Facebook, Twitter and other social media sites as long as they notify investors about where to find the information first.


Existing law prevents companies from sharing information with a select group of shareholders that would give them a leg up on trading before the information is made available to the public. For this reason, the agency said companies need to alert investors about which social media networks they plan to use when publishing an announcement.

“One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information,” George Canellos, acting director of the SEC’s division of enforcement, said in a statement. “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.”

The release of the report comes after the SEC opened an investigation into whether Netflix CEO Reed Hastings violated securities rules by using his personal Facebook account to announce that the company streamed 1 billion hours of entertainment content in June. That data was not reported in a press release or the company's financial disclosure forms.

Netflix's stock rose after media reports cited Hastings's Facebook post, which led the SEC to question whether it violated a rule that requires companies to announce material information to all investors at the same time.

The agency said it decided not to pursue an enforcement action following this incident or "allege wrongdoing" by Netflix or Hastings. However, the commission notes that "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 qualify as an acceptable method of disclosure under the securities laws."

"Personal social media sites of individuals employed by a public company would not ordinarily be assumed to be channels through which the company would disclose material corporate information," the agency adds.

In the report, the commission writes that "providing appropriate notice to investors of the specific channels a company will use for the dissemination of material, non-public information is a sensible and expedient solution."

The SEC issued guidance in 2008 that advised companies about what issues they need to take into consideration when releasing information via their company website. The guidance also discussed forms of push technology, such as email alerts, blogs and RSS feeds.

"The 2008 guidance explained that issuers must take steps sufficient to alert investors and the market to the channels it will use for the dissemination of material, nonpublic information," the report reads.

The commission said this guidance is still relevant and a helpful framework for companies to refer to when they plan to release information over social media.