SEC greenlights use of social media for company news

SEC greenlights use of social media for company news

Publicly-listed US companies can share market-moving information on Facebook and Twitter, the Securities and Exchange Commission (SEC) has ruled.

Firms are free to disseminate key information on social networks, just as they would through press releases and on their Web sites, as long as they tell investors which channel they will be using.

The SEC moved to clarify the rules in the wake of an investigation into whether Netflix CEO Reed Hastings had violated its Regulation Fair Disclosure last year when he posted company news on his personal Facebook page.

Hastings revealed on the social networking site that Netflix's monthly online viewing had exceeded one billion hours for the first time, a fact that was not given to investors through a press release or Form 8-K filing.

The SEC says that Hastings had never used Facebook to share company metrics before, nor had Netflix told investors that he might do so.

Despite deciding that using personal social media sites in this way - without warning investors - is unlikely to qualify as an acceptable method of disclosure under the securities laws, Hastings and Netflix have escaped censure.

Meanwhile, says George Canellos, acting director, division of enforcement, SEC: "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."

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