The U.S. Securities and Exchange Commission indicated that companies can use social networks to disclose financial data. BIIA welcomes the broader use of media for companies to disclose their quarterly and annual results. It may lead to more voluntary disclosure by non-listed companies. The US is way behind the EU and other nations which require non-listed companies, such as limited liability corporations, to disclose financial results.
According to ‘Wired.com’ the SEC said it was OK that Netflix CEO Reed Hastings used Facebook to disclose, in a post this past July, that Netflix was streaming video at a rate of more than 1 billion hours per month. The only thing Hastings should have done differently, the SEC added, was warn investors to keep an eye on his Facebook account. “Companies can use social media outlets like Facebook and Twitter to announce key information in compliance with Regulation Fair Disclosure (Regulation FD) so long as investors have been alerted about which social media will be used to disseminate such information,” the SEC wrote.
Tweeting or sharing “in compliance with Regulation FD” sounds incredibly dull. But the SEC’s ruling actually paves the way for tech-savvy corporations to extend a disruption of the financial press that’s been under way for years; to build their own audiences, to tell their own stories, and to shape their own public narrative. This week’s ruling means that corporations don’t just have to disclose material new financial data on some investor-relations corner of their websites, but can break news in locations where they actually have a shot at building an audience, like Facebook, Twitter, Tumblr, Pinterest — you name it.
On social platforms, where users can easily talk back, “like” or share news items with their own commentary, the stakes get even higher. Corporations are now empowered to build larger audiences on these sites by using them, per the SEC ruling, to disseminate new information formerly parceled out to the business press as scoops. They can augment this fresh data with rich media like short embedded video, a relatively new format where established news media have no real production edge.