'Dislike': Financial Industry Says SEC Social Media Policy is Too Vague

By Gretchen Wegrich

The SEC has been struggling to catch up with financial companies' use of social media every since 2000's Regulation Fair Disclosure (Reg FD) was created to ensure that companies shared material information to the public in an equal and fair manner. 

The Reg FD hardly explained what an "appropriate" way of sharing information would be. After a decade, the acceptable forms of dissemating information electronically include a press release on the company website, sending out a press release via a wire distribution service, and submitting the information to the SEC's EDGAR website. Today, these methods seem hopelessly dated and ineffective in the face of the speed of modern information sharing via social networks.

Instead of clearing up the confusion, the SEC has managed to increase it. More than three out of four CFOs and investor relations professionals believe the SEC has not offered enough guidance on how to use social media to share company information, reported KCSA, a public relations and investor firm.

Of those surveyed, 38% said they would like to use social media as part of investor relations, while 69% said they would like to use social media to share company information.

Under the new guidelines, companies can use as many social media outlets as they would like as long as they are a "recognized channel of distribution" under the SEC's 2008 guide on sharing information online. However, companies must tell their investors which social media platforms will be used to share information.

Suggestions for a simplified system of information sharing included the requirement that companies be required to post all news on their websites prior to releasing any of it via social media channel.

Gretchen Wegrich

Gretchen Wegrich is an editor at Lender411. She specializes in mortgage basics, personal finance and green living. She graduated with a bachelor's degree in writing from University of California, San Diego and previously worked at the Santa Cruz Sentinel. Contact her at gretchen@lender411com.