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SEC Permits Company Disclosures Using Social Media

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The Securities and Exchange Commission said on Tuesday that companies can use Twitter, Facebook and other social media to announce key company information as long as they alert investors about which sites they plan to use for such disclosures.

The new guidance is an effort to clarify disclosure rules after the agency opened an inquiry into a post made last July on the personal Facebook page of Netflix's chief executive, Reed Hastings.

The SEC investigated whether his announcement that the movie and TV streaming service had hit 1 billion hours viewed in June violated a rule that requires important information to be disclosed to investors at the same time.

The SEC said on Tuesday that it did not initiate an enforcement action or allege wrongdoing in that situation.

But it said staff learned that there was uncertainty about how disclosure rules apply to social media channels.

"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 enforcement division, 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," he said.

Personal social media accounts of individual officers or employees likely would not be considered appropriate venues for announcing nonpublic information unless investors are told in advance that the site may be used for such disclosures, the SEC said.

A Netflix spokesperson said the company appreciated the agency's "careful consideration and resolution of this matter."

In a more recent instance of executives making an impact through social media, Tesla Motors Chief Executive Elon Musk said last week on Twitter that something "exciting" would be announced. His tweets sent shares of the electric car maker higher.


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