Tweet-happy CEOs can rest slightly easier after the Securities and Exchange Commission disclosed new rules for social networks this week. A recent article on the New York Times website outlines some of the changes and explains some of the history of the new rules.
Social media networking, including Facebook, Twitter and other sites, has gotten corporate officials in trouble in recent years. As the article notes, in December of 2012, Reed Hastings at Netflix posted a status update on Facebook congratulating his team about for exceeding one billion hours of video in one month. The S.E.C. raised concerns that this could violate Regulation Fair Disclosure, which requires that publicly-available information go to all investors at the same time.
However, the S.E.C. changed its stance and now says that social networking sites can be a valid way to publicly release information, as long as the information is not too restricted. Accord to George S. Canellos, the acting enforcement chief at the S.E.C., “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.” Much like the 2008 clarification that corporate websites can be the sole source of information, this new stance on social media could help companies use social media more effectively.
Of course, this announcement does come with caveats, and as the New York Times article notes, could also reduce spontaneity. However, limited corporate communications via social media is still a big step forward for today’s socially-savvy businesses and hedge funds.
Read the original article here.
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