The ruling came about after a Facebook post from Netflix CEO Reed Hastings announcing that his company was streaming more than 1 billion hours of video per month caused a jump in Netflix’s stock price last July. This led to an investigation into whether the Facebook post violated the SEC’s Regulation Fair Disclosure (Regulation FD) rule which requires companies to distribute sensitive information in a way that doesn’t give one set of shareholders an advantage over another.
With this ruling, the SEC has deemed that social media can be used in the same way that companies have previously been using news releases and more recently, company websites to disseminate key business information. The key difference when choosing to distribute via social media is that organizations must let investors know which networks will be used for this purpose ahead of time.
What Should Brands Do?
If your brand wants to take advantage of social media to release business information, there are several best practices to follow, according to the Syncapse Strategy & Intelligence team.
- Ensure investors know which channels you plan to distribute information through and be consistent with the channels you use. This will provide compliance with Regulation FD and avoid potential claims of selective disclosure.
- Confirm that the social channels you will use to disseminate information do not have any access restrictions in place. All investors need to have equal opportunity to view the information that is released.
- When releasing information, only do so via official company accounts. Do not use an executive’s Twitter account or personal Facebook page. This will ensure consistency of the release location as well as avoid potential issues with access restriction.
- If possible, establish an approvals system for social media posts. Once sensitive information is published to Facebook or Twitter, it is instantly seen. If information that should not be public is released, even if quickly deleted, there is a high probability that someone captured a screenshot and can share with others.
- Make the actual location of the social accounts you will use to release information extremely clear. This ruling has the potential to generate imposter accounts (a Twitter profile that is one letter off from your official account for example) that could attempt to release false information.
- Similarly – if your official Twitter account has not yet received a “Verified” status, work to ensure it does. While Twitter has not perfected a process for granting that important blue check-mark to brands, contact them immediately to try to escalate your approval.
This ruling is a natural step forward with the rise of social communications platforms and gives brands an exciting opportunity to build excitement and momentum around key business announcements.
As with all uses of social media, especially when sensitive information is involved, brands must be careful to follow the appropriate processes to ensure accuracy and compliance with federal regulations.