SEC Gives Guidance for Social Media Disclosures

Companies no longer have to wonder what is acceptable to disclose on social media sites. The SEC has set rules for how information may be disseminated on Facebook, Twitter, and other sites.

In the past, the SEC has been stringent on what companies can communication online. Because of Regulation Fair Disclosure (Reg FD), the SEC wanted to ensure that all investors have access to information at the same time, so that no one individual or group has an advantage in investing.

Now, the agency has softened its requirements. According to a New York Times article, companies can now post, with some restrictions: 

"...companies could treat social media as legitimate outlets for communication, much like corporate Web sites or the agency's own public filing system called Edgar. The catch is that corporations have to make clear which Twitter feeds or Facebook pages will serve as potential outlets for announcements."

In a statement, the agency summarized the new rule:

"The Securities and Exchange Commission today issued a report that 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 will be used to disseminate such information."

In other words, investors need to know a company's social media strategy-where information will be posted.

By most standards, the rules are long overdue. Companies such as Netflix have been investigated by the SEC for posting information on Facebook. The clarification will help companies use multiple channels to reach multiple audiences.

Discussion Starters:

• Read the SEC's statement. What else do you learn from reading "between the lines"?
• What questions or potential difficulties remain for companies deciding what, when, where, and how to post?