Material information is defined as that which the average investor would consider important in determining whether to buy or sell stock in a public company.
Just hours after the SEC issued its statement, KCSA Strategic Communications conducted a spot survey of more than 25 investor relations professionals and CFOs of public companies. The survey revealed that 77 percent of those interviewed do not think the SEC had given enough guidance on how to use social media to disclose company information, and, as a result, are refraining from using it in their communications.
This isn’t a surprise given how vague the SEC’s statement was. George Canellos, acting director of the SEC’s division of enforcement said, “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.”
That’s not saying much. The last time the SEC issued guidance on Regulation Fair Disclosure (Reg FD) was back in 2008 when it condoned the use of a corporate website as a suitable place to accomplish disclosure. Five years ago social media was in its infancy, but has quickly become an accepted and even respectable place to obtain information of all kinds.