I was thinking about this over the weekend -- that's what happens when your daughter plays in travel softball tournaments and there are several rain delays! -- and while the SEC is understandably conservative in its approach and rulings, at what point is there some responsibility on the part of the investors to take some actions to ensure they are making at least basic, obvious steps to remaining informed about those businesses in which they are interested. I look at it like Reporting 101. When i started in technology journalism, there wasn't any mass use of the Internet. It was still a university tool, and AOL was about a year away as I recall. As a reporter I had a beat, I called those companies' PR contacts each week or so, got on their mailing list, interviewed/met their execs, talked to their partners, etc., and read everything I could find about them. Nowadays, reporters do pretty much the same thing, only in some ways it's easier (in others it's harder): You get on the email press release list; on the RSS feed; follow them and all their socially savvy execs on Facebook, Twitter, LinkedIn, Google+, YouTube, Pinterest, and anywhere else they hang out, and repeat with their partners, competitors, etc. Why wouldn't investors do the same?
@SunitaT, I agree that it would be great to use FB, twitter and other social media to forward the brand and related information. That's for marketing and PR depts. to do. When it comes to sensitive information, I would think this is best on the corporate website. Shareholders will visit the brand's website, and know that the information on there is legit.
This is an eminently sensible ruling by the SEC -- which is surprising, considering how wrongheaded many government plans to regulate the Internet are.
It recognizes that social media is a great channel for communications. It also recognizes that there are a LOT of social media platforms, and so it requires businesses to designate which ones are to be used for official communications.
It lets Reed Hastings off with a warning, because all evidence is that his intentions here were honorable.
A company can use social media as its website -- but it shouldn't. Ultimately, the company needs to be able to have a web presence it can control. What if Facebook decides to charge a dollar per like for its Pages? Or shuts down a company page for an arbitrary reason.
Companies need both a social presence and a corporate website to call home.
I think it's got to be an all-or-nothing approach: If companies embrace social media and use it for all their news then investors/followers know this is the go-to source for insight and info. If a company is hit-and-miss -- sometimes using social media, sometimes sending info via a press release, sometimes posting it on their website, etc. -- then I think that could ring SEC alarm bells. With so many emails flooding multiple email addresses, I'd think social media would be a much more streamlined way to follow investments.
Facebook is becoming the de facto newstream for many people...and in some sense, it's also replacing 4th class mail and even email lists (I've been cleaning up mine and telling vendors I will subscribe to their feed instead)!
Announcing everything on Facebook has zero cost for companies, but insures compliance (if backed up by links to the full sets of XML and text data).
If you need evidence, just go to any of the stock forums on Yahoo and Google...they are rife with information, both valid and spurious. Investors clearly want daily information, not just quarterly or annual. They want to know what is happening at the exact moment it happens, as well they should.
Using social media gives a real time immediacy to information that cannot be approached by many other means and the push, feed format means no one can claim they "didn't get the memo" or see the announcment buried in a website.
It only seems reasonable what the SEC has rules. Just full disclosure to citizens and reasonalbleness in not going after the CEO for breaking what was not ruled upon before. Social media in some ways may complicate our lives and the organizations that make use of it, but history marches on!
Why not have the one source, one place, "single source of truth" be the corporate site and keep it simple and safe from SEC rulings?
@Joanne, I agree with your point that it is better to have single source but then people these days are spending more time on social media sites like FB and twitter. Why can't use such media to share the information when you know large number of users are following you on FB and twitter ?
I guess its best for corporate citizens to just keep quiet all the time and speak only when there is a security breach or when its time to report to the SEC.
@mharden, I totally agree with you. I think all the companies should formulate new policies to discourage employees from sharing any sensitive information on their social media profile. I think companies should keep strict vigil on employees social media profiles just to make sure that employees are not sharing any sensitive data.
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