Social media moves at manic speed. Depending on how many pages you’ve liked on Facebook, your feed may run too fast for you to keep up with from minute to minute. News whisks by without your eyes ever having a chance to read more than a word. That might be fine for more mundane news, but should that be the means of processing profit and loss information from a business you’ve invested in? Since May, the U.S. Securities and Exchange Commission has allowed domestic companies to make material disclosures via Twitter and Facebook. Did you know that? Our commercial litigation lawyers did.
Changes to Existing Disclosure Rules
Making company announcements through social media, including statements of profit and loss, were actually a violation of existing SEC rules prior to this rules clarification. The haze around the regulations almost led to federal fines for streaming video powerhouse Netflix because they disclosed that their services had exceeded 1 billion hours for the first time through social media channels. Apparently, the federal government believed that access to those channels still wasn’t enjoyed by all investors across the country. As it turns out, they weren’t far off the mark.
Don’t Abandon Traditional Media Just Yet
The lion’s share of investors, in terms of cash in the market, are over 50 years old, which means they not understand how to use Twitter or Facebook to get their financial news in the way a 30-something would. If you own a growing business with investors, maintain those traditional forms of communication to disclose your earnings and stay well within the lanes established by the SEC. Your company does not need people who handed it cash to continue operations running to the federal government that you’re hiding information. The federal regulatory body might be showing some rare agility for a bureaucracy, but that doesn’t mean your visitors are doing the same.
Social Media Can be very Public
As your business builds its online presence, its probably going to garner followers through Facebook, Twitter, Instagram, and whatever other social platforms you use to reach customers. Successful companies can have millions of followers and likes that allow the immediate dissemination of information to them with the tap of a digital button on a webpage. The SEC recognized that these outlets can present highly public methods of disbursing company data in making their decision in May. Remember, if you post it to the Internet, it’s on there forever. Does this mean every investor will need to like and follow the companies they buy stock in? No, but it would sure make a lot of sense given the new ruling. The more your company interacts with its customers and investors, the better each of you can understand the other.
If your company is going through an investment or commercial litigation matter, you need the services of experienced business lawyers to investigate the case and achieve the best possible solution. Contact our legal team today for a private, confidential consultation about the matter where we’ll explain your rights and legal options.