US financial regulator rules social media can be used for trading updates following Netflix comments
The US Securities and Exchange Commission has ruled that Twitter and other social media outlets are now a valid means of communicating key announcements to shareholders.
This means that US-listed companies simply have to tell shareholders which social media channels they will use via their websites and press releases, after previously being limited to traditional mediums.
A review was sparked last year by Netflix boss Reed Hastings when he made a number of public comments on his firm’s growth via his personal Facebook page when he divulged that the firm had surpassed one billion hours of streamed content.
In its ruling the SEC said: “We do not wish to inhibit the content, form or forum of any such disclosure, and we are mindful of placing additional compliance burdens on issuers.
"In fact, we encourage companies to seek out new forms of communication to better connect with shareholders."
George Canellos, acting director of the SEC's enforcement division, added: "One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information.
"Most social media are perfectly suitable methods for communicating with investors, but not if the access is restricted or if investors don't know that's where they need to turn to get the latest news."