Yesterday the SEC issued guidance to public companies as to the use of social media (Facebook, Twitter etc.) to make announcement of corporate news.  The same ground-rules as apply to announcing news on a company website will be applied.

Regulation FD requires that material corporate news be announced in such a way as to reasonably inform EVERYONE at the same time; traditionally companies used press releases and filings on SEC Form 8K.  When companies starting announcing news on websites, the SEC advised that such prompt dissemination would be acceptable provided the public had notice that such an avenue of information would be utilized.

In a nutshell, the same controls use of social media–if you tell the public you will be announcing via social media, then the burden falls on the public to monitor those outlets and the company will not violate Regulation FD.  This is one more step in the SEC’s march towards making investors responsible for being alert; when use of websites as a news source became prevalant there was complaint that this left non-computer-users in the dark, a complaint that was ignored.  While it is likely that older investors may not spend much time with social media, it looks like the SEC similarly will not pay attention to their complaints.

Companies will need to institute discipline on the informal modalities of social media to make sure that the company (and its executives) apply SEC-type analysis to their tweets and other social media posts;  this may prove a cultural challenge for some.

One caveat: the social media outlets should be those of the company and not of the executives.