Financial Industry Gets Green Light for Social Media by S.E.C

In March, I was honored to be able to sponsor the Financial Planners Association of New Jersey workshop. In my discussion with members, the one word that persistently came up in conversations was compliance. Folks in the financial industry were afraid to promote themselves and keep in contact with clients because of the strict S.E.C. rules on disclosure. I am happy to report that, at the beginning of April, the S.E.C. outlined new disclosure rules that clarify how companies can use Facebook, Twitter, and other tools such as electronic newsletters to disseminate information. On April 2, 2013 the S.E.C. said that social media can be an acceptably broad information distribution channel as long as a company or financial planner makes it clear in advance that it will be using social media outlets to push out material news. As the Wall Street Journal notes, only 14.4% of companies currently use social media to communicate with shareholders, according to a 2012 Conference Board and Stanford University study, and it is not yet clear how investors will respond to heightened use of social media toward that end. But that may be changing with the SEC’s announcement and further use of social media on Wall Street. Information provider Bloomberg, which competes with The Wall Street Journal, for example, began providing tweets on investor terminals last week. The full article can be found at: http://blogs.wsj.com/cfo/2013/04/08/companies-take-cautious-approach-to-social-media-disclosures/?KEYWORDS=sec+social+media

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