SEC Finally Says Companies Can Communicate Via Social Media

from the welcome-to-the-21st-century dept

Back in February, we wrote about the SEC's ridiculous threats against Netflix because its CEO Reed Hastings had mentioned via his personal Facebook account the fact -- already released to the public -- that Netflix users were watching nearly a billion hours of videos per month. The SEC argued that this was a material disclosure and could violate RegFD concerning "fair disclosure" of such information. The goal of RegFD is to make sure "everyone" gets access to the same material info at the same time. Of course, that's both silly and meaningless here. It's silly because there are always going to be some people who get info later than others. No one has an immediate feed into every possible news source the instant news breaks. That's life. It was also meaningless, since the info had already been released.

Thankfully, the SEC has decided not to sanction Netflix, but has decided to use the opportunity to share new rules for public companies concerning their use of social media. The SEC has caught up to about a decade ago by admitting that, yes, companies can talk about news related to themselves via social media (phew), though they have to pre-designate which of their Twitter and Facebook feeds are potential newsbreaking venues.
“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 S. Canellos, the agency’s acting enforcement chief, said Tuesday 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.”
That seems like a good rule in theory, but in practice, it still seems kind of silly. Again, news happens in lots of places -- not everyone is going to have it at the same time. Yes, it makes sense to prevent the selective leaking of info to certain investors, though it seems like insider trading rules could handle that. If we're just talking about companies putting out info, it seems pretty reasonable to assume that investors can figure out for themselves the Twitter and Facebook feeds of whatever companies they want to follow without the SEC needing to get involved.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Anonymous Coward, Apr 5th, 2013 @ 5:47pm

    "it seems pretty reasonable to assume that investors can figure out for themselves the Twitter and Facebook feeds of whatever companies they want to follow without the SEC needing to get involved."

    Yeah, but if they DON'T have these rules, you know someone will try to find a loophole by "publishing" info on some Facebook or Twitter feed that almost nobody knows is related to the company.

     

    reply to this | link to this | view in thread ]

  2.  
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    ahow628 (profile), Apr 5th, 2013 @ 7:08pm

    What did you expect?

    You have a department charged with regulating our country's financial sector. It is run entirely by lawyers. Is anyone shocked that it is chock full of insane rules that have nothing to do with finance?

     

    reply to this | link to this | view in thread ]

  3.  
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    madasahatter (profile), Apr 5th, 2013 @ 8:17pm

    PICNIC

    I can see that you can not comment on company financial information until it is released to the public. But once it is released one must assume that it is public knowledge.

    The problem is the brain-dead idiots at the SEC do not realize that once information is published comments public comments should be expected.

     

    reply to this | link to this | view in thread ]

  4.  
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    Vidiot (profile), Apr 6th, 2013 @ 6:34am

    Next: FDA

    Social media remains a significant problem for heavily-regulated industries. Pharma and medical devices have asked the FDA for years to at least sketch out a few guidelines; and when repeatedly pushed, FDA finally came out and said, "Treat social media exactly as you would print ads and publications."

    Because they're identical, right? Make everything carry side effects and contraindications, reduced to 140 characters? The most absurd notion of all is to control all social media comments and dialogue, to prevent off-label or other impermissible language from reaching poor, uneducated Joe Citizen. FDA (and, I suspect in this case, SEC) doesn't understand the instantaneous, impromptu nature of social/viral dialogue -- uncontrollable! And that's not the essence of iron-fisted regulation.

     

    reply to this | link to this | view in thread ]

  5.  
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    Gene Cavanaugh (profile), Apr 6th, 2013 @ 12:40pm

    No serious harm

    First you argue that things you don't like, when allowed or the rules loosened, are "subject to abuse" (which is likely true), then things you like, should be allowed or the rules loosened, since they are not likely be be subject to abuse. Your reporting is excellent, but a little biased. You need to work on that.

     

    reply to this | link to this | view in thread ]

  6.  
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    nasch (profile), Apr 6th, 2013 @ 4:01pm

    Re:

    Yeah, but if they DON'T have these rules, you know someone will try to find a loophole by "publishing" info on some Facebook or Twitter feed that almost nobody knows is related to the company.

    Exactly right. Without the rule, nothing would stop companies from having a good news account and a bad news account, and publicizing the good news one and not the bad news one.

     

    reply to this | link to this | view in thread ]

  7.  
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    The Groove Tiger (profile), Apr 7th, 2013 @ 12:08pm

    I would agree if the "restriction" was merely about announcing something in any site with a paywall.

    If you're serious about being a "shareholder", you better check out all the other public venues about your company.

     

    reply to this | link to this | view in thread ]


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