The SEC announced that it will not pursue an enforcement action against a company CEO for violating Regulation FD when he announced on his personal Facebook page certain information. The SEC noted that neither the CEO nor the company had previously used the Facebook page to announce company information or had they informed shareholders that the Facebook page would be used to disclose information about the company
The SEC issued a report of investigation acknowledging that there was market uncertainty about the application of Regulation FD to social media and outlined its expectation that issuers will rigorously analyze whether a chosen channel of distribution is recognized by their investors. See Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: Nextflix Inc., and Reed Hastings, Release No.34-69279 is reported at ¶80,253.
Regulation FD prohibits public companies or persons acting on their behalf from selectively disclosing material, nonpublic information to certain securities professionals or shareholders where it is reasonably foreseeable that they will trade on the information before it is made available to the general public. For purposes of Regulation FD, a company makes public disclosure when it distributes information through a recognized channel for distribution. The SEC cautioned issuers that a deviation from their usual practice for making public disclosure may influence its view on if a chosen method in a particular case was reasonable. The SEC also suggested that the disclosure of material, non-public information on a personal media site of an individual corporate officer without advance notice to investors would unlikely qualify as an appropriate method for disclosing information to the public.
As such, executives must be weary and avoid such announcements.