SEC Socializes Public Disclosure

Eric Hazard (2)

Eric Hazard, Intermarket Communications

Guest Contributors: Eric Hazard and Jade Faugno, Intermarket Communications

In the immortal words of Heraclitus, “change is the only constant,” and once again the financial services industry – and those who communicate about it – will find ourselves evolving with the ever-changing technological landscape.

On April 2, the U.S. Securities and Exchange Commission (SEC) issued a report clarifying the extent to which companies can use social media outlets like Facebook and Twitter to announce key information in compliance with Regulation Fair Disclosure (Regulation FD).  The SEC’s decision to allow the use of social media technology for the distribution of news ushers in a new era for corporate communications.

As some of the most successful firms quickly figured out, Twitter and Facebook are valuable for their ability to connect consumers directly with the source. For financial services institutions, the benefits of social media extend even further.  Not only will increased use of social media open up additional channels of conversation with clients and prospects, but it will foster greater transparency vis-à-vis products and performance.

Jade Faugno (2)

Jade Faugno, Intermarket Communications

In the same way that shareholder conference calls have ceded popularity to webcasts and posts via company websites, social media platforms will raise the level of investor inclusion in an ever-evolving definition of “fair disclosure.”  While we think it’s unlikely that press releases and proper SEC filings will fall by the wayside, we do anticipate socially savvy companies turning increasingly to Facebook and Twitter to disseminate important news in an effort to remain consistent in their branding.

While this may cause some dislocation for existing distribution channels – such as newswires –  increased disclosure on social media sites will provide greater transparency to investors and the consuming public, as Facebook and Twitter offer an effective “push” medium to large audiences. Those most interested in the news from a public company will self-select to receive relevant updates and will get them in real-time.  Not to mention, Facebook and Twitter pages are free and open to all – and in the case of the latter, publically available whether or not one elects to register for an account of his own.

Newswires aren’t the only ones who have voiced reservations. The argument has been made that people will now be forced to sift through tweets from Charlie Sheen and Kim Kardashian to find material updates from the companies in which they invest.  But by the same logic, investors should take issue with having to rifle through newsstand shelves to separate the earnings info in Bloomberg Businessweek from the latest celebrity gossip in People Magazine.  We hardly think that’s the case.

In fact, we can look to Bloomberg to see how the model can work successfully. The wise folks behind the terminal have already offered a solution for the anticipated issue of “fluff” intruding upon an otherwise valuable feed of corporate news by introducing select tweets into the workstation.

The key word here is select, of course, and it stands to reason that there will be filters and alerts in place to help investors capture the material and leave behind the noise.

As a result, Bloomberg terminals have become the latest technological tool to assist people in organizing the social sphere into meaningful streams of information, but they’re certainly not the first.  PR pros are already familiar with TweetDeck and HootSuite, and the investment community might soon come to rely on these solutions as well.

While it remains to be seen how enthusiastically the industry will adapt, the SEC’s announcement provides an opportunity for communications professionals to lead by example on social media. While it will likely take financial services firms some time to become familiar with the nuances of Twitter and Facebook, those already in the know can demonstrate the positive impact proper social media procedure can have on a company’s reputation and image. As social media channels are championed per the SEC’s guidance, we are likely to see greater adoption of them for engaging with the public on a broad scale. The openness and transparency fostered by this freer flow of information will help to demystify financial services firms and may signal a new dawn of communications in the industry.

In an age when financial services institutions have seen their images tarnished and public trust of the corporate sector is at an all-time low, having the SEC validate social media channels – some of the most direct vehicles for external engagement – might help big firms adopt a more human exterior and work towards gaining or regaining consumer confidence. All told, this is a victory for the industry and those tasked with delivering its messages to an investor audience.

Attend the FTF SMAC (Social Media and Compliance) conference, September 18, 2013, to hear more about how regulation is impacting social media in financial services.

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