Companies Can Say it on Facebook and Twitter
US federal securities confirmed it is now legal for companies to announce news on social media sites such as Twitter or Facebook. However, the Securities and Exchange Commission warned companies that prior to any announcements investors must be notified in good time.
Lona Nallengara, acting Director of the SEC’s Division of Corporation Finance said, “Companies should review the Commission’s existing guidance — it is flexible enough to address questions that arise for companies that choose to communicate through social media, and the guidance does so in a straightforward manner”.
The SEC’s decision to allow companies the legal use of social media for distributing information came after a post by Reed Hastings, CEO of Netflix on Facebook in which Hastings announced that the company’s online monthly viewings have reached 1 billion hours.
The posting was the only announcement released by the company to this effect which caused controversy among shareholders.
Netflix is among a number of companies who lobbied for the change in corporate legislation which marks the first step towards the acknowledgment of online information sharing since the SEC’s 2008 approval of investor notification through company websites.