Let’s not get too excited just yet over the SEC’s decision to allow public companies to utilize social media as a primary source for disclosure, provided they disclose to investors which platforms they intend to employ.
While I join many others and readily agree that social media will become an increasingly important and prominent part of disclosure, the SEC’s half response to a slew of recent high-profile social media disclosure test cases, e.g. Netflix, is actually a step back for Reg FD.
Remember, Reg FD was created to provide a level playing field so that all investors, ranging from small retail to large institutions (and everyone in between) would be provided information simultaneously and through a platform that was readily accessible to all.
My concern for the SEC’s announcement yesterday resides with what constitutes accessible platforms. When Reg FD first came about, the approved disclosure platforms were fairly obvious: press releases, national newspapers, broadcast television, radio, etc., and the burgeoning Internet, which over time has increasingly been given prominence, especially in 2008 when corporate websites were deemed to constitute disclosure.