The SEC has issued guidance permitting company disclosures to be made on social media
If Bursa Malaysia follows suit, what would you need to do to prepare for this?
WE’RE all familiar with movie scenes where the paperboy calls out to passers-by: ‘Hot news, get it while it’s hot!’
That’s what came to my mind when I read about the US Securities and Exchange Commission (SEC) issuing guidance in early April permitting company disclosures to be communicated on social media platforms like Facebook and Twitter. How times have changed!
This came to pass after the SEC’s investigation into Netflix Inc chief executive officer Reed Hastings, who posted monthly viewership results on his Facebook page, last July.
George Canellos, acting director of the SEC’s enforcement division, stated “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.”
Kudos to the SEC for taking the right step forward, because what does a regulator take into account when deciding on which platforms company disclosures should be made? Equal access to information!
I would argue that if it is okay to make a disclosure on your corporate website, what’s wrong with announcing it on your social media account? Think about it – social media has over one billion users globally, and this figure will continue to increase as devices and data access become cheaper and more widespread.
“Yeah, but I’m 50 years old and I don’t use social media; heck, I’m the guy with more money to invest than a 30 year old!” Too bad, old man, get with the times or lose out.
What happened when it became okay to make announcements on TV? I bet not enough people had TVs in their homes or offices at one point. What about when it became okay to do so on the Internet? Some remisier wanted to kill himself. The naysayers have a flawed argument and this saying is fitting – you snooze, you lose!
Now that the SEC has made it official, how quickly will regulators in other major markets follow suit? What about Asia? Malaysia?
I know most of you smirked at the thought of our regulators one day saying it is okay to do so, but I’m confident the powers-that-be will see it is indeed the right step forward. Bursa Malaysia (pic courtesy of Wikimedia Commons) in 2007 issued an investor relations guide which provided guidelines on how public listed companies can disclose material information, and launched the Malaysian Investor Relations Association (MIRA) which is funded by the Capital Market Development Fund (CMDF).
Let’s receive a little education based on MIRA’s guidelines, shall we? On page 23 of Investor Relations: Put Into Practice, the annual report and company website are considered vital communication tools.
It goes on to say that:
... websites and other forms of electronic communications are now the norm. The website is an important IR tool with far more immediate impact than a company brochure. It is capable of being updated at short notice and has the ability to deliver information 24 hours a day.
Increasingly, investors and analysts conduct their preliminary research via the company’s website, so it is crucial that the website contains the right information in the right place, and that it is easy to navigate.
Wow! Is social media the norm? Yes. Does it have immediate impact? Yes. Can you update it quickly? Even quicker than a website! Will it deliver information 24 hours a day? Facebook probably has a better server uptime than most companies. Can social media be used as a source of research? Yes, yes, yes! I rest my case.
So what do you need to do to prepare for this inevitable future? There’s plenty of work to be done once Malaysian regulators approve social media as a resource for company disclosures, so why not prepare early?
Speak to your legal, IR and customer services teams – get everyone on the same side and prepped.
Prepare announcements for every platform you currently use that the company’s social media accounts are now a resource for company disclosures.
Make sure your website’s homepage has all the social icons in order. This is a good way for investors to know which the company’s official social media account is.
YouTube -- use it. Get a face; put him or her in front of a camera, and record announcements. Analyst briefings are so old school. This is of course in addition to posts on Facebook and Twitter.
Once our regulators make the announcement, click “Post” and submit your application to the Malaysian Book of Records as the first company to make a corporate disclosure on social media.
Jagdish Singh Malhi is an ex-banker turned marketing and communications specialist with a deep interest in brands using technology and data to meet business objectives, and has been on both sides of the client/ agency divide.
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