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April 3, 2013

US SEC says companies can announce key information on social media

Move follows its investigation into comments made by Netflix CEO Reed Hastings on his personal Facebook page

By CBR Staff Writer

The US Securities and Exchange Commission (SEC) said companies can use social media outlets like Facebook and Twitter to make key announcements as long as they inform investors which sites they will use.

The move from the SEC follows its investigation into comments made by Netflix CEO Reed Hastings on his personal Facebook page stating that the company’s monthly online viewing had crossed one billion hours for the first time.

The watchdog said Netflix did not report this information to investors through a press release or Form 8-K filing, and a subsequent company press release later that day did not include this information.

According to SEC, neither Hastings nor Netflix had previously used his Facebook page to announce company metrics, and they had never before taken steps to alert investors that Hastings’ personal Facebook page might be used as a medium for communicating information about Netflix.

SEC Division of Enforcement acting director George Canellos said: "One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information."

"Most social media are perfectly suitable methods for communicating with investors, but not if the access is restricted or if investors don’t know that’s where they need to turn to get the latest news," Canellos said.

In 2008, the SEC issued guidance clarifying that websites can serve as an effective means for disseminating information to investors if they’ve been made aware that’s where to look for it.

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