The SEC Says its Okay For CEOs to Talk Shop on Social
When Netflix CEO Reed Hastings posted a Facebook update congratulating his content licensing team on facilitating 1 billion hours of viewing, I’m sure he didn’t expect to influence government policy.
Then again. . . maybe that was the plan all along.
The Securities and Exchange Commission jumped all over Hastings for the post, because they thought it violated the rules that govern public disclosure of business information. Regulation Fair Disclosure says that public companies have to disclose information to everyone at the same time. That way, one person can’t buy and sell stock based on that information before the rest of the world gets the news.
Admirable, but like many laws and regulations, this one was technologically behind the times. So the SEC sat down to think it over and they came back with a ruling – Hastings is in the clear. And with that, they cleared the way for public companies to reveal vital information via social media.
One caveat, you have to tell your investors to follow you on Facebook, Twitter, Pinterest or where ever you plan to post. No, I’m not kidding.
George Canellos, Acting Director of the SEC’s Division of Enforcement says:
“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.”
On one hand, this is a good thing. It means companies can be more transparent without fear of getting in trouble with the SEC. It also means that the information will be available to the general public, which could make more people interested in investing. It’s also good for small businesses looking for public support.
On the other hand (because there’s always another hand), removing the caution tape could lead to over-sharing. It can also lead to unverified posting. CEO gets great news so he sends off a Tweet! Yeah. We’re doing great. Five minutes later, the VP breaks the news that the data was wrong. Missed a couple of data pockets. All sorted out now and the gain is only 1% not 10%.
Now the CEO has to delete or amend his post and that always comes back to bite you. If he had to wait to put out a formal press release, the numbers would have been verified before they were released to the public.
Maybe what big companies need is a social mediary to vet all posts from the CEO before he hits the button.