US rules on social channels

On 2 April 2013, the United States Securities and Exchange Committee (SEC) issued a report on Regulation Fair Disclosure (Reg FD) and the use of social media for disclosing material information.

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The report outlined the case of Netflix and the use of CEO Reed Hastings’ personal Facebook account to distribute information that could potentially be considered material with regards to the amount of hours streamed on the site in one month. This case made the SEC look into whether companies should use social media channels as a means to disseminate material information and how that would potentially work.

Most of the issues with the use of social media centered around Reg FD and the Securities Exchange Act of 1934 (the Exchange Act), which helps to ensure that all audiences are aware of what channels companies use to send out material information and that they received the information at the same time where possible, as with RNS statements in the UK.

The SEC published guidance over the use of websites to disclose material information back in 2008 and after looking through the Netflix case and the existing guidelines, advised that the use of social media and other ‘emerging means of communications’ should follow the same guidance as corporate websites.

So for now, companies in the US can use social channels to disseminate material information as long as they have advised shareholders first of where they will be posting. Some early adopters have included Yahoo, who used a professional cut video to present a video earnings webcast with CEO Marissa Mayer, and Netflix’s Google Hangouts session featuring Reed Hastings, chief content officer Ted Sarandos and CFO David Wells answering questions from veteran reporters. This was later made available to download.

While the take up has been slow, it is definitely there. Whether this will follow on to encompass other forms of media remains to be seen, as does whether the UK will follow. In the meantime talk around Investor Relations continues to grow on social channels. Why not take a look at our Twitter account?