• SEC Provides Guidance on the Use of Social Media for Public Company Disclosure
  • June 19, 2013
  • Law Firm: Harter Secrest Emery LLP - Rochester Office
  • The Securities and Exchange Commission (“SEC”) recently issued guidance indicating that public companies may use social media channels, such as Facebook and Twitter, to publicly disclose corporate developments while complying with Regulation FD. The SEC issued the guidance in the form of a Report of Investigation (the “Report”) in connection with the SEC’s investigation of whether a post on the personal Facebook page of the chief executive officer of Netflix, Inc., Reed Hastings (“Hastings”), violated Regulation FD. In June of 2012, Hastings posted on Facebook that for the first time in company history, Netflix had streamed one billion hours of content in one month. Neither Hastings nor Netflix had previously used Hasting’s personal Facebook account to announce company metrics, and Netflix had not issued a press release, filed or furnished a Form 8-K, or otherwise informed shareholders that it would use Hasting’s Facebook page to disclose information about Netflix. Further, the Facebook post was not accompanied by a press release or a post on Netflix’s own website or Facebook page. According to the report, after the Facebook posting, the price of Netflix’s stock increased from $70.45 at the time of the post to $81.72 at the close of business on the following trading day. Based on the above facts, the SEC investigated whether Hasting’s Facebook post violated Regulation FD. While the SEC decided not to pursue an enforcement action against either Netflix, Inc. or Hastings, the Report seeks to clear up any confusion about the applicability of Regulation FD to communications made through social media channels.