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The SEC & Social Media: The What, Why, and How

Updated: Aug 22


In an effort to protect investors, the SEC has released guidelines for social media. The goal is to make sure that information shared through social media channels is accurate and not misleading. This can be a bit of a challenge for businesses, as the rules are constantly changing and evolving. In this blog post, we will discuss the what, why, and how of SEC guidelines in social media. We will also provide some tips on how to stay compliant!

THE WHAT - The SEC released its first set of social media guidelines in 2013. The guidelines state that companies must take steps to ensure that information shared on social media is accurate and designed to get that information out to the general public broadly and non-exclusively.



THE WHY - The SEC has been slow to clarify its position on social media guidelines, but in 2012 Reed Hastings, the CEO and co-founder of Netflix, posted a Facebook message--on his personal profile--that dramatically affected its stock value and finally led to the regulator's clarification on this arena.[1]


In the early hours of July 3, 2012, just before 11:00 am EST, Hastings posted the following message to his personal Facebook account:

"Congrats to Ted Sarados, and his amazing content licensing team. Netflix monthly viewing exceeded 1 billion hours for the first time ever in June. When House of Cards and Arrested Development debut, we’ll blow these records away. Keep going, Ted, we need even more!"

Although this post may seem innocent, the fact of the matter is that Netflix had not previously utilized Hastings's personal Facebook page to announce company metrics, and Netflix had not previously informed shareholders that Hastings would use Netflix's Facebook page to disclose information about Netflix.


THE HOW - The bottom line is that the SEC wants companies to be transparent when sharing material information on social media. The goal is to protect investors and ensure that they have access to accurate and timely information. This means that if a company plans to share material information on social media, it must do so in a way that is not accessible to only a select group of people. If a company plans to share material information on social media, it must make sure that the information is shared with all investors at the same time.


 

DISCLAIMER - Nothing in this Blog constitutes professional and/or financial advice, nor does any information on the Blog constitute a comprehensive or complete statement of the matters discussed or the law relating thereto.


 


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