SEC Green Lights Social Media for Corporate Announcements

On Tuesday, the Securities and Exchange Commission issued a report which clarifies that companies can, indeed, use social media outlets like Facebook and Twitter to announce important corporate information.

However, the SEC warns, investors must first be alerted about which social media platforms will be used to release such information.

The SEC’s report of investigation confirms that Regulation FD applies to social media and other emerging means of communication used by public companies the same way it applies to company websites.

In 2008, the SEC issued guidance indicating that websites can serve as an effective means for disseminating information to investors if they’ve been made aware that’s where to look for it.

Tuesday’s report clarifies this matter even more by determining that company communications made through social media channels could constitute selective disclosures and, therefore, require careful Regulation FD analysis.

“One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information,” explains George Canellos, Acting Director of the SEC’s Division of Enforcement. “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.”

According to yesterday’s announcement, Regulation FD “requires companies to distribute material information in a manner reasonably designed to get that information out to the general public broadly and non-exclusively. It is intended to ensure that all investors have the ability to gain access to material information at the same time.”