SEC Guidelines on Social Media: Guest Post by Erin Mannix

On April 2, 2013 the U.S. Securities and Exchange Commission issued new rules regarding the disclosure of key information. The SEC gave the OK allowing companies to use social media as a main source of communication among their investors. However, with this change to section 13(f) of the Securities Exchange Act of 1934 comes several ethical rules that companies must abide by.

Before releasing company information, companies must inform all of their investors where the information will be posted. If companies do not follow this important rule, using social media as a form of communication will not be worth it; it will only be able to be seen by certain investors. Investors must be alerted of the release of new information, and they must be alerted at the same time, giving no one investor a leap ahead of the other. If information is only released to certain investors, it leaves others behind on the latest news and updates. One group of investors or shareholders should not be given an advantage just because a company is selectively withholding important information from others.

Due to this new change to section 13(f) of the Securities Exchange Act of 1934, business communication will never be the same. With the constant changes and improvements with technology and social media sites, companies will have to continuously change and adapt to keep up. If companies are serious about using social media as a main source of communication, they must use it consistently and remember to continuously update, inform, and monitor what is being said about them. Using social media can jeopardize or improve a company’s reputation. If a company only posts a minimal amount of information, investors may begin to question how invested they are. With that being said, if companies take advantage of this new rule, posting information and constantly updating, social media sites can also gain something. Companies can help social media sites to grow and become bigger than they may be already. Companies can exchange information and feelings on how one site may work better to release certain information over others. If companies work well with the social media sites, both can advance and grow.

Social media is a quick and easy way for companies to spread important information as long as they are doing it correctly. Companies must be aware of what they are writing on social media sites and letting the public into. Whatever you place online is public information; it is how investors and the public perceive you and your company.

Hoping that all of the company’s investors are on the social media sites to obtain this information, companies should take advantage of this new change in the Securities Exchange Act of 1934. Using social media can be a great way to improve a company’s image. It can show what the company’s views are on certain topics, while releasing fast information for all of its investors to obtain.

No one can know what may come with the future and companies using social media. The future of company’s and the use of social media to release information is entirely up to the company and if they can quickly adapt and change with the technology. If they choose to take advantage of this new rule, they should not forget to interact with their audiences.

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