The Wall Street Journal: Companies Go Slow on Social Media Disclosures

U.S. companies are indicating they plan to take advantage of new rules allowing them to post material information on Facebook or Twitter accounts, in line with new SEC social media guidance, but it isn't clear yet when they will actually take that step. Companies are still cautious, waiting for someone else to be the first to experiment with the new landscape, and have been rattled by a Twitter hack last week that sent stock markets falling, advisers say.

The Securities and Exchange Commission updated its guidance earlier this month, to allow companies to use social media for material disclosures without violating Regulation Fair Disclosure requirements that are designed to let all investors have equal access to information. The agency said that companies could communicate via social media, but only if they first let investors know that they were going to use social media, and where exactly investors should look for that information.

So far, a handful of companies from various industries have said in U.S. regulatory filings that they may use social media to disseminate information. Those firms include auto dealership Penske Automotive Group , measurement company Nielsen Holdings N.V ., online games producer Zynga Inc. , and streaming video company Netflix Inc. - whose row with the SEC over its chief executive's social media postings inspired the agency's new guidance. But most of these companies said they would only use the channels "from time to time" leaving investors to wonder when material information will be issued from those accounts, advisers say.

When companies list a lot of channels, investors are left asking: "Do I need to follow all these channels in order to determine where to get my material information on a company I'm following?," Jeff Corbin, chief executive of investor relations firm, KCSA Strategic Communications, said at a panel discussion in New York last week. He said he has written a letter to the SEC asking them to clarify whether companies should be telling investors to look at channels that they don't actually use for that purpose.

Some companies are also delaying application of the new guidance at all, amid hopes that other companies will start testing social media strategies first. Security is a top concern due to the ease of creating fake social media accounts. A fraudulent Associated Press tweet last week that roiled markets with a fake claim about explosions at the White House served as another reminder of the risks involved.

Companies have said they will not deter their social media plans after that event, but "no one's going to run 100 percent to it right out of the gate," Michael Nowlan, president and chief executive of Marketwire, said on the panel.

Other advisers said social media practices are likely to evolve over time. Matt Farlie, managing director of NASDAQ OMX Corporate Solutions, said at the panel he envisions a day when companies will accept a Facebook friend request from the SEC, to loop the regulator in to its disclosures directly.

Some companies might use social media in the future to reach out directly to retail investors during proxy season, to broadcast key executive comments from investor presentation events, or establish dedicated investor relations accounts to separate investor content from consumer content, said Vinny Jindal, chief executive of investing social network, at the discussion.

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