The U.S. Securities and Exchange Commission (the “SEC”) recently provided guidance to listed companies on the use of social media sites (such as Facebook and Twitter) to disclose material non-public information to the public. The SEC guidance arises from a recent SEC investigation of the disclosure of potentially material non-public information by Netflix, Inc. on the Facebook page of its Chief Executive Officer. The investigation focused on whether disclosure on social medial sites was in compliance with the SEC’s Regulation FD, which requires most public companies to disclose material non-public information in a method that “is reasonably designed to provide broad, non-exclusionary distribution of the information to the public”1. The SEC noted that its recognition of social media sites as a disclosure method was consistent with earlier guidance dating back to 2008 that permitted the use of corporate websites to make public disclosure of material information.
The SEC guidance permits the dissemination of material non-public information on a company’s Facebook, Twitter or other social media site so long as the company has previously announced its intention to do so.2 The SEC does not mandate the form that such prior notice must take, however, it suggests that the inclusion of a statement on the company’s corporate website as well as in a SEC-filed report (e.g., Form 8-K or Form 6-K) and press release as an acceptable method. The content of the announcement should identify any specific social media sites that the company may use in the future, which should be accessible to all persons without cost, as well as a link to the applicable social media site and a brief description of the registration, subscription or similar process necessary to access the company’s disclosure.
A company that elects to utilize social media sites as a disclosure medium may wish to continue to use a traditional form of disclosure (such as a press release or SEC-filed report) which includes a statement that the information is also available on the applicable social media site until the social media site becomes “a recognized channel of distribution” by investors. Finally, the SEC cautions that the use of social media sites does not impact the substantive content of material disclosures and that companies will remain liable for the accuracy and completeness of all disclosures, regardless of the medium used. The SEC further notes that information disclosed on social media sites may not be incorporated by reference into registration statements filed with the SEC, including shelf registration statements.
If you have any questions concerning this bulletin, please contact your Seward & Kissel LLP Capital Markets Group attorney.
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1 Regulation FD does not apply to foreign private issuers, however, such issuers are subject to similar obligations relating to the timing and method of disseminating material non-public information.
2 The social media site should be in the name of the company, and not that of an individual officer or employee of the company.
