SEC Says Social Media Can Be Used for Disclosing Corporate Information


It took more than a decade, but the Securities and Exchange Commission (SEC) has finally introduced itself to the 21st century.

The SEC on Tuesday outlined new rules allowing companies to use social channels, such as Facebook and Twitter, to disclose key information, so long as corporations inform investors about their social-media strategy.

“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 Division of Enforcement, 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.”

The SEC’s move could be a game changer on the social-media front. While many C-level execs have been reluctant to embrace social channels, the SEC’s new policy could spur senior managers to more frequently blog, tweet and post Facebook messages, which, at least on paper, should enhance the value of public-relations pros.

“It’s a positive step because it clears up a lot of uncertainty,” said Allison Fitzpatrick, a partner in the advertising, marketing and promotion practice of Davis & Gilbert LLP, which focuses on the marketing-communications industry. “There’ll be increase in the numbers of public companies and executives making statements on social channels. On the flip side, [senior] execs may be far more careful in what they say [because] their statements may be scrutinized by the SEC.”

She stressed that the SEC’s new disclosure rules could elevate the role that PR execs play, particularly at the corporate level. Companies have to make sure that messages running on social channels “don’t run afoul of the Fair Disclosure regulations,” Fitzpatrick said. “That’s where PR has to be involved in scrutinizing those statements” that might be aired on social platforms.

The SEC said its new decree regarding social media stems from an inquiry into a post by Netflix CEO Reed Hastings on his personal Facebook page stating that Netflix’s monthly online viewing had exceeded one billion hours for the first time.

Neither Hastings nor Netflix had previously used his Facebook page to announce company metrics, and they had never before taken steps to alert investors that Hastings’ personal Facebook page might be used as a medium for communicating information about Netflix.

What effect do you think the SEC’s rule change will have on PR? 

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