SEC Allows Companies To Announce News To Investors Through Facebook

Soon, investors will be able to learn more about companies in the same space where they play Candy Crush Saga. The Securities and Exchange Commission declared Tuesday that companies can notify their investors of news through Facebook and Twitter.

The SEC’s report outlines that it’s now OK for companies to use their social media channels, such as Facebook and Twitter, to reach out to investors. However, the companies have to make sure ahead of time that investors know which sites will receive this information.

George Canellos, acting director of the SEC’s division of enforcement, commented on this new development in a press release:

One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information. 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.

What brought about this decision was a post on the personal Facebook page of Netflix CEO Reed Hastings. He stated that Netflix’s monthly online viewing had gone over 1 billion hours for the first time. The SEC noted that Netflix did not report that information to investors through a press release or Form 8-K, and a press release later that day did not include that information.

Netflix’s stock price rose from $70.45 at the time of the Facebook post to $81.72 at the close of the following day

The SEC wants to make sure that all investors receive information fairly, so it is opening up social media as another way that information can be spread.

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