After months of investigating and deliberating, the SEC finally ruled on Tuesday that using social media to communicate with investors is legal, and that passing information in this way is akin to communicating through more traditional methods like using the company’s website or press releases. Thanks, SEC. Very astute. You’re a little late to the party, but welcome to the 21st century.
Apparently the controversy was sparked off by this post by Netflix CEO Reed Hastings in July 2012.
This post reached his 200,000 subscribers in a matter of seconds, and stock prices subsequently rose. The SEC, concerned that this type of posting violated fair-disclosure rules, originally argued that this type of communication creates an advantage to investors who are more inclined to utilize social media.
Get with the times. The same investors who aren’t using social media are probably the same ones waiting politely by their mailboxes for the pony express to deliver the annual earnings report. Everyone’s using social media, and those who aren’t probably still benefit from those who do use it in the form of asset managers and financial advisors. Companies and investors who don’t aren’t using social media to communicate information will eventually be lapped by those who embrace it.
So the SEC has basically given us the ok to “keep doing what you’re doing”. Government regulation once again tries to dip its hand into our free market economy cookie jar, but this time is summarily swatted away.
Thoughts, monkeys?
Can social media be used to influence people in negative ways? I think if I want to do what Reed H. did and start hype around my company I could post something, less-than truthful, and hope for a buying frenzy. Or perhaps the opposite so I can buy lower - like back in the day waiting in line for beer; Yell out "Keg's tapped!" and see how fast you get your cup filled. I don't disagree that internet, social media, and Google glasses are the way of the future; but what's stopping me from using my genius for evil, and claiming I was hacked if I'm caught?
Also, does this open up government interference on my social network now? You've already heard the talks about taxing emails...what will come of this? I cringe at the thought.
I think that this is just another example of the idea that government is totally outdated in its current form. Technology grows exponentially while the best a bloated and incompetent government can do is progress linearly.
It should be deemed an acceptable way of communicating before it gets done. Going SURPRISE i just tweeted everything means any spoof account could do crazy things with market prices. It's modern, but doesnt make it smart.
As part of the SEC announcement, don't companies now have to announce that there will be a big announcement on FB/twitter/social media on X date?
how much wood could a sec woodchuck chuck, if the sec wood chuck could chuck wood?
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