Companies may now handle disclosures over social media, the Securities and Exchange Commission ruled.
Banks and other public companies can use outlets like Facebook and Twitter to make crucial announcements as long as they notify investors beforehand which social media platforms they're going to use, the SEC said Tuesday. They must follow the same disclosure regulations that apply to company websites, the agency said.
The new ruling extends the agency's 2008 disclosure guidelines for announcements made on websites to social media sites. (The previous guidelines said that companies could make key disclosures on their websites as long as they tell shareholders in advance where to look.)
"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," said George Canellos, acting director of the SEC's enforcement division, in the news release.
The SEC's ruling on social media disclosure stems from an investigation into a Facebook post made by the chief executive of Netflix, which announced that the company had passed a milestone in customer use. The company had never before made announcements through its CEO's Facebook page, and Netflix stock rose after the announcement.
Banks and other public companies must comply with a complex system of social media rules set by multiple regulators, including the SEC, Finra and the Federal Financial Institutions Examination Council.