Can public and private executives get in trouble with the SEC for disclosing corporate details or revealing non-public information in Social Media? Ask Reed Hastings, the CEO of Netflix and he will say absolutely yes. The SEC filed an action against the CEO after he revealed subscriber data on Facebook that was not yet public information. A von Briesen & Roper attorney who specializes in this area of the law went into great detail about this very topic.
So, this begs the question, is Social Media not a proper outlet for public disclosure of information by executives?
The SEC has strict rules about the disclosure of information to the public so that it is materially available at the same time to anyone that is interested. But, a company gets into trouble when they randomly pick and choose how, when and WHERE to disclose the information. So a website update one day and a Tweet next month will not fly in the eyes of the SEC; the poster and company will both be fined.
One could further argue that neither Facebook nor LinkedIn will ever be an appropriate forum for public disclosure of information. Primariliy because you must be a "Fan" or Follow the company and/or executive before you can read about the update that is disclosed to the "public".
Is it really a public forum when you must first subscribe and then be accepted into the stream of data? Not really. Twitter is a bit more of an open network as long as you know the correct Twitter Handle of the REAL executive. So many spoof and fan accounts muddy the waters that some people may follow the wrong accounts and may not realize it. This is unlikely because many spoof accounts take humor to a new level--but it is not always 100% clear who is the real CEO or corporate spokesperson (ask BP about their Twitter spoof fiasco). Twitter's verified accounts help to a degree, but the process to get verified is still somewhat mysterious.
Social Media has been striving to be the replacement for traditional media sources. But, the issues of trust, transparency and verification of fact are three factors that will prevent it from completely replacing our traditional news sources. Public companies and their executives need to take extra caution about what they say and reveal in these forums--especially when it is information that has not been fully disclosed in other outlets.
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