On April 2nd the SEC issued a press release, which has been widely reported in a number of ways, as to what this actually means for organizations. In this blog, lets take a look at what it actually means.
WHAT DOES THE SEC SAY?
Here’s what the SEC actually says “companies can use social media outlets like Facebook and Twitter to announce key information in compliance with Regulation Fair Disclosure (Regulation FD) so long as investors have been alerted about which social media will be used to disseminate such information”.
The exact text is on the SEC website: http://www.sec.gov/news/press/2013/2013-51.htm We’re pleased to see that the content was tweeted as well. Interestingly, it was in 2008 that the SEC actually cleared the use of websites for the dissemination of key information. It feels like its been a long five years to get the same clearance for social media. But perhaps not. On August 6th 1991, some 17 years earlier the first website was born, at CERN – the first URL for that website was http://info.cern.ch/hypertext/WWW/TheProject.html in case you want to check it out. So, it appears progress is being made. Our world is speeding up.
WHAT DOES THAT ACTUALLY MEAN?
- It means that, so long as a public company announces in advance, what social outlets they will use, that they are able to disseminate key information through these channels.
- In general, key information is usually mailed out or put on a wire service like Marketwire or PR Newswire and also onto the company website.
DOES THIS MEAN THAT THE FINANCIAL SERVICES INDUSTRY WILL NOW ALL BE ON SOCIAL?
- Not necessarily, it doesn’t meant that individuals in companies will necessary be all now posting content through their individual network updates.
- It does mean that firms will need to open up access to social media so that Financial Advisers, Relationship Managers and those assisting clients with investment information can access this information – it really IMO opens the floodgates for firms now saying, that if you have financial professionals who need to keep up to date with key publicly traded companies, then they need to see this information. If you don’t, then it would be like forbidding a professional to read the newspaper or watch TV.
- Usually when public companies distribute key information like this, they distribute it through a “corporate property” – in social terms this would be the company Facebook page, or the company Twitter account, or the company page on LinkedIn.
- Record retention requirements means that companies will have retain records of what they posted. i.e. LinkedIn company updates.
WHAT DOES IT MEAN TO THE DISTRIBUTED TEAM?
- It means that they will require access to social in order to conduct their work effectively.
- As a result of the SEC’s ruling, anyone that needs to keep an eye on key information from public companies will NEED to have access to social in order to remain competitive.
- The socially savvy public company will use individuals to push this content out, along with corporate brands. Take Reed Hastings of Netflix for instance – this whole thing started because it was HIS Facebook page, not the company page.
WHAT DOES IT MEAN TO FINANCIAL SERVICES FIRMS and PUBLIC COMPANIES?
1) Archiving company updates for public companies will become a must have. Public companies will need to archive the company updates and any other updates that are related to Regulation FD.
2) Ensuring that the right person / people approved this content is key. They will need to prove that it was approved by the relevant individuals/groups in the organization.
3) Companies may choose to share content to a “Shareholders Group” on LinkedIn, a group on Facebook, or a private feed on Twitter, thus requiring that content is approved and archived, is again key.
4) Some companies might select individuals to share this key information – so ensuring that the content is again approved and archived is key. However, the SEC points out, that “The report of investigation explains that although every case must be evaluated on its own facts, disclosure of material, nonpublic information on the personal social media site of an individual corporate officer — without advance notice to investors that the site may be used for this purpose — is unlikely to qualify as an acceptable method of disclosure under the securities laws. Personal social media sites of individuals employed by a public company would not ordinarily be assumed to be channels through which the company would disclose material corporate information.” So ensure prior notification has been made – and that it is clear, which channels and which accounts will be used to disseminate this information.
5) Those firms that block social access for the wider team will not be evaluating their policies, in order to provide open access to at least view for instance LinkedIn news and company updates while on corporate machines.
6) Social networks outside of Facebook and Twitter should be lobbying the SEC – who referenced only Facebook and Twitter – but not LinkedIn as social channels. LinkedIn is the network that most business professionals feel comfortable with and with whom they connect with business colleagues on much more than Facebook and Twitter. It’s clear that the SEC needs to understand the company area of LinkedIn, but also the value of the personal network – using the Reed Hasting’s example – if he had used his LinkedIn network update to push this out, it would have had the same effect as he did with Facebook.
WHAT SHOULD YOU DO?
1) Review your social policies, both for listening, and for distributing content. This great move by the SEC has opened the way for “no business reason for social” to be removed. Ensure that you’re including all the stakeholders into this review.
2) Ensure, if you are a public company, that any content you are sharing on social – goes through the same approvals that content for other mediums does. Archive it and retain it.
3) Embrace this new communications modality approval by the SEC. Those who disseminate key information in compliance with Regulation FD, through social channels, will certainly be in the forefront of the press and generate those softer elements of ROI, that we all strive for. So make sure you take this into consideration when you’re looking at the benefits of social.
Let me wrap up by asking a question. If you were to choose one social channel to share key information.. what would it be?