Disclosure in a Tweet

Is disclosure in a Tweet realistic?

Earlier this year the SEC (The Securities and Exchange Commission) issued a report that makes clear that companies can use social media outlets like Facebook and Twitter to announce key information in compliance with Regulation Fair Disclosure (Regulation FD) so long as investors have been alerted about which social media will be used to disseminate such information.

The broad thrust of this initiative is that the SEC is trying to keep up with trends in communication methods but in some minds this particular initiative raises more questions than it answers. For example, how much can or should a company say in a Tweet that is no more than 140 characters long? And just how pervasive is Twitter in the investor world bearing in mind the SEC’s missive that one set of shareholders should not be able to “get a jump” on other shareholders just because the company is selectively disclosing important information.

The move to Tweeting also seems curiously at odds with general trends in financial reporting. Statutory disclosures are getting longer by the year. Yet here is the regulator suggesting the most compact form of communications used since the demise of Egyptian hieroglyphics… the original microblog.

So will businesses be imaginative with their tweets or will the tweet simply become another method of linking to the usual 300 page reports on the corporate web site?

IPO by Social Media? Twitter goes Tweet!

No sooner had we started analyzing the rationality of the Securities and Exchange Commission’s view that companies can use social media to announce key information in compliance with Regulation Fair Disclosure, Twitter (not known for being long-winded) announced its intention to IPO in a single Tweet.

The solitary Tweet took advantage of a law change in the US that allows companies to keep information about the companies trading, its approach to the share sale and other information such as how much money it hopes to raise, confidential until close to the time it sells the shares. The new legislation is designed to encourage listings although the jury is still out on whether the rule changes are having the desired effect. On the other hand it is also attracting criticism for reducing the level of public scrutiny of an intended IPO.

But what is striking about the Tweet is that an IPO every bit as substantial and exciting as Facebook, can be reduced to 140 characters. And if a material development like this is merely covered in a tweet what does this herald for other material events? On the other hand when disclosure is this brief, auditing the output becomes a microwalk in the park.


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