SEC Says Social Media OK for Company Announcements if Investors Are Alerted (with Lofchie Comment and Cite to Lofchie/Bondi Discussion)
The SEC issued a report which makes clear that companies can use social media outlets like Facebook and Twitter to announce key information in compliance with Regulation Fair Disclosure ("Regulation FD") so long as investors have been alerted about which social media site will be used to disseminate such information. The report was issued in response to an announcement by an officer of NetFlix on Facebook announcing that Nexflix had streamed a significant amount of content in June. This raised concerns that readers of Hasting's Facebook page were obtaining inside information.
(Regulation FD requires companies to distribute material information in a manner reasonably designed to get that information out to the general public broadly and non-exclusively.) The report expresses worries that company communications made through social media channels could constitute selective disclosures and, therefore, require careful Regulation FD analysis. Nonetheless, the SEC is not taking any action against Netflix or Hastings.
Lofchie Comment: In the "Insider Trading Chapter" of Lofchie's Guide to Broker-Dealer Regulation, Brad Bondi and I discuss the point at which information becomes "public" (or ceases to be nonpublic) and whether, for example, information that has been posted in a public site on the web is per se public.