SEC clears use of social media for company announcements
- 3 April 2013
- From the section Business
US-listed companies can now use Twitter and other social media services to make key announcements, the country's financial regulator has ruled.
The US Securities and Exchange Commission (SEC) said firms simply had to tell investors which social media providers they will use.
It comes after the SEC investigated comments made on Facebook last year by the boss of video service Netflix.
Netflix chief executive Reed Hastings had commented on the firm's growth.
On his personal Facebook page last July, Mr Hastings announced that the company had reached the milestone of its users watching one billion hours of streamed films and TV programmes.
The SEC said in its ruling: "We do not wish to inhibit the content, form or forum of any such disclosure, and we are mindful of placing additional compliance burdens on issuers.
"In fact, we encourage companies to seek out new forms of communication to better connect with shareholders."
Under the changes to the SEC's Regulation Fair Disclosure rules, firms will have to note on their websites and press releases that they will use social media to make future announcements, to ensure that all shareholders are made aware.
"One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information," said George Canellos, acting director of the SEC's enforcement division.
"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."
Howard Lindzon, the founder of Stockwits, a firm that collates Twitter posts about company shares, welcomed the SEC's announcement.
"The industry is changing, and it was a matter of time before it was going to be regulated," he told Reuters.