The United States Securities and Exchange Commission (the “SEC”) issued a report following an investigation into the use of social media, such as Facebook and Twitter, for corporate communication. The report clarifies that public companies can use social media to disseminate corporate information without violating Regulation FD if they take steps sufficient to inform the market of the social media channels that they intend to use to disseminate the information.
Regulation FD prohibits certain selective disclosure by public companies of material, nonpublic information. The SEC, concerned that disseminating material, nonpublic information via social media could result in a violation of Regulation FD, launched an investigation into a post by Netflix CEO Reed Hastings on his personal Facebook page regarding Netflix’s monthly online viewing.
In the report, the SEC states that it will not pursue an enforcement action in the Netflix case and that it has decided to provide guidance to public companies regarding how Regulation FD applies to disclosures made through social media channel.
The report confirms that Regulation FD applies to corporate communications made through social media, but acknowledges that social media can be used without violating Regulation FD. In order to comply with Regulation FD, public companies should alert investors to the social media channel they intend to use disseminate corporation information. Disclosure of material, nonpublic information on the personal social media site of an individual corporate officer, without advance notice to investors that such channel will be used for a disclosure purpose, is unlikely to satisfy Regulation FD requirements.
The full report can be found here.