On Wednesday the 3rd of April, The New York Times reported that the Securities and Exchange Commission said that postings on sites such as Facebook and Twitter are just as good as news releases and company websites as long as the companies have told investors which outlets they intend to use.
The move was sparked by an investigation into a July Facebook posting from Netflix Inc. Chief Executive Reed Hastings, who boasted on the social-media site that the streaming-video company had exceeded one billion hours in a month for the first time, sending the firm's shares higher. The SEC opened the investigation in December to determine if the post had violated rules that bar companies from selectively disclosing information.
"An increasing number of public companies are using social media to communicate with their shareholders and the investing public," the SEC said in its report Tuesday. "We appreciate the value and prevalence of social media channels in contemporary market communications, and the commission supports companies seeking new ways to communicate."
The fair-disclosure rule at issue requires companies to disseminate information in a way that wouldn't be expected to give an advantage to one group of investors over another. The SEC has said that filing a form, known as an 8-K, or holding an earnings call are both ways to ensure compliance with the regulation.
With the continued use and adoption of social media and mobile technology, the relationship between financial advisors and their customers is in transition. Is your company’s IT, Client Services, and Business Development groups aligned as to how best to meet and exceed investor communications? Where are you on the technology adoption curve? Is client adoption outpacing your compliance department’s ability to insure compliance?