In a world where information has to be disseminated to investors equally, it’s important for us to know where to turn for useful information. In most cases, it means going to a company’s investor-relations website and signing up for press releases, which is how companies release most of their important information.
That’s why Netflix, Inc. (NASDAQ:NFLX) CEO Reed Hastings got into trouble after posting on his Facebook Inc (NASDAQ:FB) account that the company had delivered 1 billion hours of streaming content. This wasn’t released by the company; Hastings posted it on his personal account, and investors who didn’t look there weren’t made aware of potentially relevant information.
But the SEC ruled yesterday that it wouldn’t punish Hastings for the gaffe and even said it will allow social networks to be used to disseminate information to investors. This marks a paradigm shift in the way companies can deliver information.
Opening a can of worms
For those of us who use Twitter to follow the markets and companies, this could be an advantageous ruling. But the SEC didn’t go as far as saying which social networks can be used, only that companies have to tell investors where they can find information. One company might use Facebook, one might use Twitter, and Google Inc (NASDAQ:GOOG) now has ammunition to use Google+ to communicate with investors.
For Facebook Inc (NASDAQ:FB), Twitter, and Google Inc (NASDAQ:GOOG), this is great news. They’re now a little more necessary in investors’ lives, maybe drawing a few new users into their ranks.
As Fortune writer Dan Primack pointed out yesterday, the SEC didn’t even go as far as to say a central repository is required. Most companies have investor-relations websites these days, and this would be a logical place to store all necessary information and list the feeds the company is on. But even that’s not required.