April 3, 2013
Companies can communicate with investors via social media as long as they announce in advance which outlets they intend to use, the Securities and Exchange Commission said yesterday.
As The Wall Street Journal reports, the ruling cleared Netflix CEO Reed Hastings of wrongdoing for using social media to disseminate corporate information. The agency had investigated whether Hastings violated fair-disclosure rules after he boasted in a Facebook post that the streaming-video company had exceeded one billion hours in a month for the first time — news that sent the firm’s shares higher in July.
“An increasing number of public companies are using social media to communicate with their shareholders and the investing public,” the SEC report said. “We appreciate the value and prevalence of social media channels in contemporary market communications, and the commission supports companies seeking new ways to communicate.”
The agency suggested that a corporate executive’s personal Facebook page, like the one Hastings had used, might be less acceptable than a company’s social media page for making important announcements. Joseph Grundfest, a former member of the commission who now teaches at Stanford Law School, said that Hastings’ personal Web page probably informed more people more quickly than a formal SEC filing would have. — Greg Beaubien