Social Securities
The Securities and Exchange Commission’s recent decision allowing public companies to announce information via social media outlets like Facebook and Twitter is a logical next step for a government agency that has been relatively non-committal about new information channels.
Most public companies think in terms of 10-Ks, 10-Qs, 8-Ks and the like when it comes to disclosure, in addition to issuing news releases on wire services, such as Business Wire, PRNewswire, GlobeNewswire and Marketwire. But times are-a-changin’, indeed. When an executive can speak directly to his or her audience on Facebook or Twitter, it seems superfluous to shell out thousands of dollars a year to issue news releases.
Tweeting a link to financial results is, in many ways, a lot easier (and certainly less expensive) than uploading an eight-page news release to a wire service. So what if tweeting financial results will not reach Yahoo! Finance, Google News and other websites that are fed by wire services. Consider how liberating it might feel to spoon feed your messages directly to audiences who care the most about your news.
Not so fast.
To think that social media are a perfectly benign and convenient way to disclose information is about as naïve as believing that Dennis Rodman and Kim Jong-un are BFF. Consider the fact that thousands upon thousands of fictitious identities are created on Facebook and Twitter on a weekly, if not daily basis. Now add to the mix that companies are issuing market-moving information on these very same networks, and soon the powder keg doubles, triples and quadruples in size.
Don’t get me wrong. I love social media and believe that a plurality of channels begets a more well-informed public. But the SEC doesn’t (likely) have the bandwidth to police the myriad shenanigans that social media have the ability to perpetuate.
And so my question is this: Is the SEC saying OK to social media to save face(book) on the fact that it did not initiate an enforcement action on Netflix CEO Reed Hastings? Or is it due time for the SEC to embrace social media for what they really are: new information channels that have the potential to breed a hornet’s nest of Reg FD infractions.
— Evan Pondel, epondel@pondel.com
