Tonight's Guest Post is by Calvin Allen, experienced PR professional and candidate for a Masters Degree in Public Relations and Corporate Communications at NYU.
Communication snafus of varying degrees happen daily. The foul-up may be hitting “reply all” on a questionable e-mail or Virgin Mobile running an offensive holiday ad. Whichever the case, these events rarely lead to litigation. Unfortunately for Nexflix CEO Reed Hastings, the Securities and Exchange Commission served Hastings with a Wells Notice for posting “material information” on Facebook.
For those unfamiliar with Wall Street speak, material information is any information that may influence investors to buy or sell stock. Under the Regulation Fair Disclosure Act, known as Reg. FD, material information cannot be selectively released. This rule prevents certain investors from gaining a competitive edge.
The offending post stated that Netflix members had watched more than a billion hours of content in June.
Posting material information on Facebook is a first offense for Netflix, but Hastings’ problem isn’t unique. In fact, his problem speaks to a larger concern—all employees in publicly held companies should have an understanding of what type of company information can be disseminated via social media.
Disseminating material information on social media is as much an in-house employee communication issue as it is a financial regulatory concern. As I see it, there are two key steps companies can take to protect themselves:
1. Empowering Social Media Policies: The importance of social media policies has been written about extensively. What is often overlooked is the need to make these policies as empowering as possible. Richard Edelman, of Edelman PR, notes in his blog that employees can be some of the strongest brand advocates. Social media policies should not be about stifling speech, but instead should provide enough guidance for employees to confidently engage in advocacy, promotion and genuine communication.
2. Employee Training: Financial regulation literacy training should be a rite of passage for all employees. Sure, this additional training may add 5 or 10 minutes to the company orientation, but think of all the headaches and very real financial and legal complications that may be prevented later.
Mixing business and social media can be a litigious minefield—this goes double when you factor in financial communications and regulation. We’d be well advised to learn from Hastings’ ordeal and ensure that our companies offer a basic understanding of disclosure law and have a well-articulated social media policy.