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SEC Embraces Social Media

Publication Date: 
April 02, 2013
The Wall Street Journal Online
Jessica Holzer and Greg Bensinger

Professor Joseph Grundfest spoke with the Wall Street Journal's Jessica Holzer and Greg Bensinger about the SEC's approval of corporate reporting through social media and the expansive reach of companies disclosing relevant information through Facebook and Twitter.

Executives with itchy Twitter fingers can rest easier after federal securities regulators blessed the use of social-media sites to broadcast market-moving corporate news.

In a ruling that portends changes to how companies communicate with investors, the Securities and Exchange Commission said Tuesday that postings on sites such as Facebook FB +2.87%and Twitter are just as good as news releases and company websites as long as the companies have told investors which outlets they intend to use.


Joseph Grundfest, a former member of the commission who now teaches at Stanford Law School, said the SEC is bowing to reality in blessing social media. Twitter, where users can post comments of 140 characters or less, says more than 200 million people world-wide use the service at least twice a month. Facebook says it has more than one billion users.

"As a practical matter, Reed Hastings' personal Web page probably informed more people more quickly of the information than" a formal SEC filing, said Mr. Grundfest, who published a paper in January urging the SEC not to pursue an enforcement action against Mr. Hastings. "You don't have 200,000 people a day checking Netflix filings on" the SEC's electronic-document site.