Relax! New SEC Social Media Ruling Is a Good Thing
This week, the SEC approved the use of social media outlets for the dissemination of public company information under regulation "fair disclosure" more commonly known as "Reg FD."
The premise of Reg FD was that anytime a public company disclosed any material information that might impact the company's stock price, that information would be available to everyone. This would put the common man, Joe Blow investor, the little guy, on the same footing with the big bad institutional investors. No longer would the rich, the powerful, the connected and the insiders have better, or dare I say more, information than the typical retail investor. It was intended to create a level playing field for all investors; the proletariat and the bourgeoisie all happily trading stocks with same information in a capital markets utopia.
We can debate the efficacy of Reg FD at another time.
Now, the SEC has thrown another curve ball at investor relations professionals across the land. Investor relations professionals, also commonly known as the IR folks, are the people tasked with creating, managing and distributing all public-facing communications with the shareholder community. Good news, bad news and indifferent news all need to be packaged and communicated "fairly" as defined by the SEC. This is a daunting task that requires a herculean effort on the best of days.
Now, throw social media into the mix!
(Read More: SEC Embraces Social Media, but Questions Still Loom )
The spontaneous, immediate, raw and impulsive imagery associated with social media has now darkened the cubicles and corridors of the investor relations professional.
They now have to reckon with Facebook, Twitter and even Instagram. Infamy equates with popularity and memorability in the world of social media. The tweets, posts and pics we "like" and "share" are often those that would have been better off left unsaid, especially after a hangover, blow-back, firing, fining, break-up, dismissal, resignation and general embarrassment (e.g. @ChryslerAutos, @RepWiener).
When the "inside voice" becomes the "outside voice," there is never the scenario when a tree falls in the woods. Imagine a public company CEO after a few cocktails tweeting that their company is going to miss their quarterly revenue targets? Twitter and Facebook become the executive confessional.
The good news for the thousands of IR professionals that are losing sleep over this new development is that they need not.
Social media will never become the exclusive distribution mechanism for investor relations. Since Reg FD was passed almost a decade ago, publicly traded companies leveraged various technologies to communicate and inform investors as well as remain compliant with the SEC. Conference calls, originally the mainstay for investor communications, was complemented, and in many cases has been replaced, by audio and video webcasting over the Internet. Thousands of earnings calls, annual meetings and investor conferences take place each year leveraging webcasting. Investor relations professionals have improvised, adapted and embraced the new technology.
They should, and will, do the same by leveraging social media as an additional distribution mechanism.
(Read More: SEC Nominee Says Potential Conflicts Not a Problem)
That said, make sure your CEO and CFO don't have personal Twitter accounts.
Nick Balletta is CEO of TalkPoint, an industry leader in global communications technology.