SEC's new ruling on social media is a game-changer

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In December 2012, Netflix Inc.'s Chairman-CEO Reed Hastings posted a 43-word message on his publicly available Facebook page to congratulate his team on achieving more than 1 billion hours of watched video in one month. The message resulted in the Securities and Exchange Commission warning the company that it could face sanctions, as the post was in violation of the Regulation Fair Disclosure, which postulates that a company needs to disclose material information to all investors at the same time. In April, however, the SEC issued a new ruling allowing companies to use social media networks such as Facebook and Twitter to disperse information, as long as investors know of these social media activities. This officially turned social media outlets into legitimate sources of material information. As a result, chief executives can now use social media freely to post blogs, messages, tweets and other content on social media channels—provided that investors are informed about their social media strategies beforehand. This move by the federal agency is a big step in showing how much social media is gaining an increasingly important place within business and that its prevalence can no longer be ignored. Rather than ban or penalize social media used in business, the SEC has instead opened a way to incorporate the current dynamic social age and allowed businesses to leverage the business benefits that go with it. While the new ruling means that executives and their companies can now use social media freely to publish company information, it also means that investors and other parties need to embrace these new technologies and move forward within the business revolution that is currently taking place. Avoiding or ignoring social media use is no longer an option. Integrating it instead within the DNA of an organization is the way to move forward for everyone involved. This milestone also shows how others operating within industries related to business, such as law, politics or education, all need to move forward as well, if they have not already done so, to integrate these dynamic technological changes within the essence of their domains, as the SEC has done within the securities industry. Social media is no longer solely a tool for solidifying and amplifying a company's marketing strategy. Its role within business is constantly widening, encompassing more and more facets of a company's operations. By being pushed to the forefront of company-investor relations, social media has officially reached the inner realm of the company itself and has been brought into play as a valuable tool to communicate and collaborate with key partners. Steve Nicholls is principal at Social Media in Business ( He can be reached at [email protected].
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