US Securities and Exchanges Commission allows companies to notify investors through social media

The Securities and Exchanges Commission in the US has issued guidance to companies allowing them to make key announcements to investors through social media networks, including YouTube, Facebook and Twitter.

The news follows an investigation after Netflix chief executive Reed Hastings made comments on the company’s official Facebook account.

As SmartCompany reported at the time, in July of last year, Hastings posted a comment on Facebook celebrating the fact that consumers had watched over one billion hours of content through the online video giant’s services during the previous month.

While consumers downloading one billion hours of content constituted a clear “material event” under “Regulation FD” reporting laws in the US, it was unclear at the time whether a social media represented an “effective means for disseminating information to investors.”

In a statement, the SEC clarifies that, just like websites, most major social media networks do fulfil the criteria.

“Today’s report clarifies that company communications made through social media channels could constitute selective disclosures and, therefore, require careful Regulation FD analysis.”

“One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information,” says acting director of the SEC’s Division of Enforcement, George Canellos.

“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.”