updated 06:52 pm EDT, Tue April 2, 2013
New policy follows Netflix CEO investigation
The Securities and Exchange Commission has revised its reporting requirements, enabling companies to use social media to announce information that could be of interest to investors. The Commission cites its investigation into a Facebook post by Netflix CEO Reed Hastings, which noted viewership metrics and drove up the company's stock value, as the driving force behind its reconsideration and clarification of the current Regulation FD reporting requirements.
"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 SEC Division of Enforcement acting director 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."
Although the SEC chose not to punish Netflix for the Facebook post, the agency calls on companies to notify investors if personal social-media accounts from employees might be used to post such information. Hastings' post referencing a billion hours of user streaming in June was said to have been viewed by 200,000 followers, without a simultaneous announcement on the company's website or a filing with the SEC.
"Personal social media sites of individuals employed by a public company would not ordinarily be assumed to be channels through which the company would disclose material corporate information," the announcement adds. "Companies should review the Commission's existing guidance -- it is flexible enough to address questions that arise for companies that choose to communicate through social media, and the guidance does so in a straightforward manner."