SEC just gave permission for companies to use social media to announce corporate information – with one condition – so long investors are given a heads up first. Do you remember the uproar in July when the CEO of Netflix shared some news via Facebook? This new policy is actually a response to Netflix’s case, and SEC decided not to press charges against Reed Hastings. You’ve probably read about it on #IRchat but there are still a few things to look out for before blasting tweets about your company’s news.
Ensure selective disclosure doesn’t happen
“One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information”.
Do allow your company to disclose corporate information but don’t have information scattered. All media platforms should have the same and entire information presented to investors. Investors might only subscribe to one of the many social media updates, so providing same information on each platform is important.
Investors must know specifically where
“It is intended to ensure that all investors have the ability to gain access to material information at the same time”.
Have “social media disclosures” but let’s not assume investors will know where to look. Like SEC has reinforced, investors need to be informed and alerted if you’re going to use social media platforms.
“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”.
In Netflix’s case, Hastings can’t use his personal Facebook account as a news portal. Learn the rules and identify which and specific social media outlets your company intends to disseminate corporate material. This is the perfect chance to invite your investors to follow your corporate Twitter account – contact them, let them know where to gather their information needed.
Through social media channels, companies can react and communicate corporate news in real time, but the problem is that Twitter names can be easily faked, and accounts can also be easily hacked. Will this increase the chances of virtual scam? Yes but it’s also important to remember, if it’s on the internet, there is at least 0.00001% chance of attacks. We can also say the same for corporate websites that have been used to announce news. Maybe this will encourage companies to put more security locks on their social media (let us help you with that! Give us a tweet @BlenderMedia!)
“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.”
I mean, that’s why we have hashtags like #InvestorRelations and #IRchat. In year 2008, websites can be used as an effective portal to release information to investors as long as they know where to look for it. Now, that social media networks like Facebook and Twitter are given the green light too. It’s time to take advantage of posting your press releases, SEC filings, and annual reports etc. on more platforms. It’s all good news as long we keep an eye on the Regulation FD! Don’t forget to tune in with @SEC_News and also, let us know your thoughts about this new policy @BlenderMedia!