Plenty has been made of the SEC social media guidance this month. Much of the criticism of the Guidance seems to make the point that the SEC has not gone far enough in laying out a framework for the use of social media for disclosure. While you could make that argument, we feel that the 2008 ruling on the use of company websites for disclosure actually makes things pretty clear.
Channels of Distribution
The phrase "channels of distribution" in the 2008 Guidance suggests that websites are no different than any other form of public communication. The exact phrasing, below, acknowledges that as long as the public is made aware of channels of distribution, disclosures will be in accordance with the SEC's Guidance.
"The central focus of this inquiry is whether the company has made investors, the market, and the media aware of the channels of distribution it expects to use, so these parties know where to look for disclosures of material information about the company or what they need to do to be in a position to receive this information."
Rather than trying to use the 2013 Guidance to clarify the 2008 position, it might be easier to consider the two statements the other way around, as the SEC itself did:
"we emphasize that the Commission’s 2008 Guidance, though largely focused on the use of web sites, is equally applicable to current and evolving Social Media channels of corporate communication."
A Sample Disclosure Process
So how is your company actually supposed to use social media? While this will obviously vary depending on the specific channels of distribution your company decides upon, our advice would be to follow a formula that looks something like:
- issue an annual press release which stipulates every channel of distribution the company will use that year
- submit a form 8k with this press release
- publish all future press releases to your company website first
- distribute this website page on your company website through your other distribution channels
- issue a form 8K for each of the events listed on the SEC website
- Send the press release using a wire service (this will assure it appears in places like Yahoo Finance and other news aggregation websites)
Audience Size Does Not Matter
One of the most interesting phrases in the SEC social media guidance is as follows:
"...even if the individual in question has a large number of subscribers, friends, or other Social Media contacts, such that the information is likely to reach a broader audience over time..."
This is the one area of the SEC social media guidance that should be crystal clear. The size of your company's social media following is irrelevant in so far as disclosure is concerned - as long as the disclosure you make is publicly accessible and your company has gone to every effort to inform the public where to find it. This means that like Netflix, you're free to use personal social media profiles, as long as posts about the company are public.
However, the Guidance does not allow senior management to make private statements to their friendship circles on Facebook about material changes at the company they work for. If it's not already, restricting this should absolutely be a part of your public company's social media policy.