The Securities and Exchange Commission's embrace of social media for disclosure of material information by public companies this week, rather than alleviating apprehension among IR pros and chief financial officers, leaves many wanting more clarity on the issue.

That's the result of a survey by KCSA Strategic Communications in the wake of the SEC's April 2 report.

KCSA found 77 percent of CFOs and IR pros said they don't think the SEC has given enough guidance on how to use social media for disclosure.

The SEC said an investigation confirms that Regulation FD applies to social media and other emerging means of communication used by public companies the same way it applies to company websites. The securities regulator said in 2008 that websites were acceptable for communications if investors were made aware that the sites are the place to look for such info.

sec twitterActing director of enforcement for the SEC, George Canellos, said the commission's concern is that one set of shareholders should not get a jump on others because of selective disclosure. "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," he said.

The SEC was moved to investigate the matter after Netflix CEO Reed Hastings posted on Facebook last July that the company's monthly viewing exceeded one billions hours for the first time a month earlier.

While the SEC said neither Hastings nor Netflix alerted investors that material info would be posted on Facebook, it declined to initiate an enforcement action or allege wrongdoing by the executive or the company because of uncertainty.

But going forward, the agency said, personal social media sites of company employees will not ordinarily be assumed to be channels for material disclosure unless the company gives advance notice to investors that the site could be used for that purpose.

KCSA surveyed IR heads at more than 25 public companies after the SEC report this week and found that while 69% said they would like to be able to use social media for disclosure, only 38% are currently using it for IR and 86& said they would be willing to incorporate it if the SEC provided more guidance.

Among IR pros using social media now, 56% use Twitter, 22% are on LinkedIn and 11% use Facebook. Another 11% use outlets like blogs, Slideshare or StockTwits.

KCSA CEO Jeff Corbin said the SEC's statement "makes complete sense" and shows its willingness to "accept and welcome the 21st Century ways of doing things." He added that social media is here to stay, and "public companies should embrace it as a "vital and viable way to accomplish disclosure."

Industry Response

Press release services embraced the SEC decision but were careful to stress that releases should be the preferred method of dissemination for accuracy, editing help, wide reach and security.

Marketwire president and CEO Michael Nowlan said the SEC ruling was "inevitable" and that MW fully supports it, adding that questions being raised about the future of newswires in the wake of the SEC announcement remind him of the 2008 ruling on websites.

"Ultimately, the market sets what qualifies as good communication and transparency for a publicly traded company," he said. "The vast majority of companies still issue news releases because they are a real-time, effective way to distribute information to shareholders. The networks are deep, broad and efficient."

"Social media can be a valuable part of the investor relations ecosystem, but it should not be the core," said Business Wire CEO Cathy Baron Tamraz. She said that Social media has been a key part of its distribution platform for years -- BW hold two SM patents – but added the company is  "wary" of "unintended consequences" of relying on sites that don't have the security or reliability that should be afforded the investment sector.  

PR Newswire executive VP and chief commercial officer, Scott Mazarsky, said April 3 that the SEC's embrace of social media is a good thing but "ambiguous" in that it could be read to permit disclosure of material info solely through social media, which could limit the audience.

"This would not be a good thing for companies, investors, capital markets, analysts, traders, journalists, PR Newswire or anyone else, and we think that it is highly unlikely that companies will use social channels as their sole means of disclosing material information," he said.

Bloomberg said April 4 that it is the first financial information platform to integrate real-time Twitter feeds of companies, executives, government officials, media and others directly into its workflows for market pros.