On Tuesday, the U.S. Securities and Exchange Commission said that companies can use their social media accounts like Twitter and Facebook to make vital announcements, as long as they informed their investors the sites which will be used by them to release such data. The clarification would help companies fully utilize their social media channels and extend their reach to investors.

The clarification followed the inquiry into a post made in July 2012 by Neflix’s chief executive, Reed Hastings. The purpose of the SEC investigation into the Netflix case was to find out whether the announcement made by Reed Hastings on his personal Facebook page had violated rules of releasing key data to all investors at the same time.

On Tuesday, the SEC also confirmed that it did not find sufficient ground to allege any wrongdoing in the Netflix CEO Facebook post. However, during the investigation, the SEC found that its staff was uncertain about the application of disclosure rules to social media.

  

What

Where

Search Jobs

George Canellos, the acting director of the SEC’s enforcement division said in a statement that, “One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information.”

Canellos further said, “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.”

At issue is the Reg FD or Regulation Fair Disclosure of the SEC which has often been criticized by companies as being outdated and caught in a time warp while social media revolutionized the way news was shared in the world.

Under the new guidelines by the SEC, companies can notify on their websites and in press releases that they will be using social media to make announcements and on which pages.